United’s 1-0 win at Sunderland had given them an 18-point lead but City cut their advantage back to 15 points ahead of the forthcoming Manchester derby by crushing Newcastle United 4-0 at the Etihad Stadium.
Carlos Tevez slid in to convert Gael Clichy’s cross in the 41st minute and David Silva made it 2-0 before half-time when he collected Samir Nasri’s pass and rifled a shot into the bottom-right corner.
Making his first appearance in two months, City captain Vincent Kompany added a third in the 56th minute with a flick from Gareth Barry’s low shot and an own goal from James Perch made Newcastle’s misery complete.
City now have a five-point cushion in second place after Chelsea saw their hopes of Champions League qualification compromised in a 2-1 loss at Southampton.
Jay Rodriguez put the hosts ahead in the 23rd minute, exchanging passes with Steven Davis and coolly steering the ball past the advancing Petr Cech.
Chelsea captain John Terry equalised in the 33rd minute, heading home from a corner, but Rickie Lambert restored the hosts’ lead two minutes later when he swept home a superb free-kick from 25 yards.
Southampton have now beaten City, Liverpool and Chelsea at home this year, and Arsenal and Tottenham Hotspur were the chief beneficiaries of their latest success.
Spurs won 2-1 at Swansea City to leapfrog Chelsea into third place, although they have played a game more.
Jan Vertonghen’s classy finish put Tottenham ahead in the 17th minute and the Belgian then teed up Gareth Bale to beat Michel Vorm with a vicious strike from outside the area.
Michu replied with a 71st-minute header, but Spurs held on.
Fifth-place Arsenal closed to within just two points of Chelsea after a 4-1 win at home to Reading, who sank to the foot of the table in new manager Nigel Adkins’ first game in charge.
Goals from Gervinho, Santi Cazorla and Olivier Giroud saw Arsenal construct a 3-0 lead inside 67 minutes, with Mikel Arteta adding a fourth from the penalty spot after Hal Robson-Kanu had hit back for the visitors.
Everton can move to within four points of the Champions League places if they win at home to Stoke City in the evening kick-off.
Manchester United took a step closer to a 20th English league title by grinding out a 1-0 win at Sunderland in the lunchtime game.
With an FA Cup quarter-final replay at Chelsea on Monday, United manager Alex Ferguson rested Rio Ferdinand and Wayne Rooney but saw his side score the game’s only goal in the 27th minute when Titus Bramble diverted Robin van Persie’s cross into his own goal.
Victory was especially sweet for United as Sunderland’s fans had celebrated exuberantly at the Stadium of Light on the final day of last season when United found out they had been pipped to the title by City.
“They weren’t the only fans who enjoyed that, but that’s gone now,” United midfielder Michael Carrick told Sky Sports.
“It was about coming here, getting the points, ticking the game off, and keeping the run going.”
Defeat left Sunderland four points above the relegation zone in 16th place, although they have played at least a game more than the teams immediately below them.
Elsewhere on Saturday, an 81st-minute goal from Arouna Kone gave Wigan Athletic a 1-0 win at home to Norwich City that hauled Roberto Martinez’s side out of the relegation zone at Aston Villa’s expense.
Meanwhile, Andy Carroll scored twice, with Gary O’Neil also on target, as West Ham United eased their own relegation fears by beating West Bromwich Albion 3-1.