Leicester's progress in the Championship was halted after a five-minute spell in which they conceded a penalty and had their captain sent off.
Visiting fans blamed substitute referee Kevin Wright for a first defeat in eight matches but Leicester manager Sven Goran Eriksson had no argument with the Cambridgeshire official over either decision. Wright, the nominated fourth official, replaced Graham Salisbury at half-time after the latter suffered a calf injury and awarded a penalty against Andy King for bringing down Jean Beausejour five minutes into the second half. Leicester argued that King's outstretched leg made contact with the ball before the Chilean midfielder went down but television replays were inconclusive.
Marlon King put Birmingham ahead from the spot and worse followed for Eriksson's side when Matt Mills launched a two-footed challenge on Morgaro Gomis. The Birmingham midfielder escaped injury but Wright noted that Mills had both feet off the ground and guidelines left him with little option but to show a red card.
"It is difficult for the referee," Eriksson said. "I have watched the incident five or six times and I don't know if it is a penalty. The red card? Matt won the ball but you cannot tackle like that these days, so the referee got it right."
Mills became the 14th player sent off by 40-year-old Wright in two and a quarter seasons and left Leicester to play the last 35 minutes with 10 men. They made a bold attempt to retrieve the match after Eriksson replaced Yuki Abe with Richie Wellens in midfield and gave Jermaine Beckford a chance to score his first goal for Leicester but were finished off by a Birmingham counter-attack six minutes from time.
Earlier, Steven Caldwell had headed narrowly wide for Birmingham and Mills forced a good save from Boaz Myhill in an even first half before the excellent Beausejour hit the angle of post and bar with a fierce shot at the start of the second. The Chilean was a deserving man of the match, although Eriksson had a case for claiming he should have been sent off, too, for a foul on Lee Peltier that escaped a second yellow card.
The killer moment for Leicester came when Keith Fahey broke from defence and passed to Marlon King, who showed astute vision to turn and send Chris Wood clear with a sweeping through ball. The 19-year-old New Zealand-born striker, on loan from West Bromwich Albion, has scored eight goals from nine Championship appearances for Birmingham and the composure he revealed to go past Kasper Schmeichel and slot the ball home from an angle was impressive.
Manager Chris Hughton spent the summer watching Birmingham's relegated Premier League side effectively sold off in bulk but after a difficult start a fourth win has lifted them six points clear of the bottom three.
"We have benefited from the window closing and we have a more consistent line-up that is beginning to gel as a team," Hughton said.
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