United, hoping to forget their European exit, were rocked when Robbie Fowler scored after three minutes.

Jon Macken doubled the home side's advantage before Paul Scholes gave United hope just before half-time.

But second-half goals from Trevor Sinclair and Shaun Wright-Phillips stunned United and further loosened their fragile grip on the Premiership crown.

The scoreline, though, was deserved for City, who defeated their neighbours for only the third time in Sir Alex Ferguson's 17-year reign.

The visitors hit the woodwork twice and always looked more dangerous on the attack but still contrived to be behind at half-time.

The match started at a frenetic pace, Scholes adding to an already electric atmosphere inside the City of Manchester Stadium with a late, lunging tackle on Michael Tarnat.

But the City fans were in dreamland moments later when Fowler gave them the perfect start.

The former Liverpool striker beat Phil Neville to Antoine Sibierski's flick-on before calmly slotting the ball under Tim Howard's body.

United almost cut short the celebrations a minute later when City keeper David James palmed away a fierce Scholes shot straight into the path of Ronaldo, who smacked his effort onto the foot of the post.

KEY MOMENTS 3 mins: Fowler fires City into the lead 32 mins: Macken doubles City's lead against the run of play 35 mins: Scholes powers home to reduce the deficit 73 mins: Sinclair pounces to put City in control 90 mins: Wright-Phillips completes United's misery

Former United trainee Jon Macken latched onto a loose ball and his shot on the turn squeezed through Mikael Silvestre's legs and inside the post.

But their two-goal cushion lasted less than three minutes as Giggs laid off Ronaldo's cross to Scholes, who lashed the ball home.

City, looking for a win in the first derby staged at the City of Manchester Stadium, were reeling and Ronaldo came agonisingly close to an equaliser when his curling shot came off the crossbar.

The Portuguese winger was again involved moments later when his cross just evaded Scholes' outstretched foot.

The half-time whistle came and Kevin Keegan responded by bringing on Paul Bosvelt and Sinclair for Claudio Reyna and Steve McManaman.

However, United continued to probe after the break, albeit without creating any clear-cut chances, and as in the first half, Ferguson's side were hit by a sucker punch.

Sinclair pounced on a dreadful error by Silvestre, who fluffed his lay-off to Wes Brown, and lifted the ball over a stranded Howard.

With full-time approaching, Wright-Phillips started and finished a great move from one end of the field to the other when he unleashed a ferocious shot past the hapless Howard to complete a stunning win and leave the Premiership champions 12 points behind leaders Arsenal with 10 games remaining.

This wasn't City's problem though as they eased their way out of the relegation dead man zone. Chelsea and Arsenal both came here and were given a tough time by City but United were clearly third best in title race and certainly runners up in the Manchester Stakes.

COME ON YOU BLUUUUUUES

Man City: James, Dunne, Van Buyten, Distin, Wright-Phillips, Reyna, Sibierski, McManaman, Tarnat, Macken, Fowler.
Subs: Arason, Wanchope, Jihai, Sinclair, Bosvelt.

Man Utd: Howard, Phil Neville, Brown, Silvestre, O'Shea, Ronaldo, Fletcher, Butt, Giggs, Scholes, van Nistelrooy.
Subs: Carroll, Bellion, Solskjaer, Forlan, Lynch.