It was almost beyond credibility that Manchester United could be guilty of such carelessness. At 4-2 the home fans were going through their victory songs, Sir Alex Ferguson was waving at the Stretford End and United were in position to be crowned at the home of Manchester City and, in the process, subject their neighbours and nearest rivals to the most excruciating ordeal.

What happened next threatens to have huge ramifications in the title race.

There were only two minutes separating the goals from Nikica Jelavic and Steven Pienaar that turned United's winning position into a late, desperate finish, culminating in five minutes of stoppage time and a frenzied onslaught at the Everton goal. This time there was no Steve Bruce moment and suddenly, almost inexplicably, the way is open for City. "A throw‑away, an absolute giveaway," Ferguson claimed afterwards. "I can't believe it."

It was a game of numbers and the arithmetic now revolves around their match at the Etihad Stadium on Monday week. "A title decider now," Ferguson said.

City are three points behind and would overtake their neighbours on goal difference by defeating them. No wonder Ferguson said it would be the biggest derby of his 25 years in charge. Ferguson is fond of saying that it is in United's DNA to make life difficult for themselves but the mood at Old Trafford was sombre.

A team with these powers of endurance can shake the disappointment out of their system in time to face City but, equally, the memories remain of the 6-1 defeat at Old Trafford in October. United have now conceded more home goals than in any other Premier League season and Ferguson made no bones about what had contributed to the latest ordeal. "Terrible defending," he said.

Perhaps there was complacency, too. At 4-2 Old Trafford had been a happy place, relaxed and celebratory. The truth, however, is it had never been an entirely comfortable afternoon for the champions from the moment Jelavic's expertly taken header put Everton ahead after 33 minutes. They have not won at this ground for 20 years and were coming off the back of a bitterly demoralising defeat by Liverpool in the FA Cup semi-final.

They played as though affronted by the suggestion that they would roll over and they deserve enormous credit for the confidence and ambition that went into becoming only the third side to score four or more goals at Old Trafford in the Premier League era. Amid all the scrutiny of where it went wrong for their opponents, it would be remiss if the away side did not get due credit.

The first shudder of apprehension reverberated through the stadium when Tony Hibbert crossed from the right and Jelavic's perfectly weighted header dropped just inside a post. Rafael da Silva had been caught out of position and it seemed in keeping with the way the home side had begun the match. It was strange, in the extreme, that they could be so subdued with the stakes so high.

They did, however, recover to take command and at that stage it had looked as if they were on their way to another victory for their resolve and longevity. Wayne Rooney headed in Nani's cross for the first of his two goals and at the start of the second half the home side's momentum had notably picked up.

Daniel Welbeck scored with a lovely shot into the top corner and four minutes later the lead was stretched to two goals when Nani darted into the penalty area, collected Welbeck's pass and dinked a clever shot over Tim Howard in the Everton goal. Welbeck's link-up with Rooney demonstrated why Javier Hernández is struggling to get games and Nani was a frequent menace on his return from injury.

This was the day, though, when United's old midfield issues resurfaced.

Phil Neville and Darron Gibson, two men returning to their previous club, relished the task of thwarting Paul Scholes and Michael Carrick in the United midfield. Everton simply refused to give up, signalling their intent when the indefatigable Marouane Fellaini volleyed in another Hibbert cross to make it 3-2 midway through the second half.

The nerves inside Old Trafford were quickly soothed when Rooney turned in Welbeck's pass for the 180th goal of his United career, overtaking George Best and Dennis Viollet as the fourth highest scorer in the club's history. It was supposed to be an occasion of celebration and it probably would have been had Patrice Evra's 81st-minute header from Da Silva's cross not come back off a post.

Two minutes later Jelavic lashed in his second of the afternoon, after Rio Ferdinand and Jonny Evans went for the same ball. Then Da Silva's positioning was again exposed as Fellaini set up Pienaar to poke his shot past David de Gea. It was a wild and eccentric finale and in the closing moments it needed a one-handed save from Howard to tip over Ferdinand's left-foot shot and deny United a late and dramatic winner.

Ferguson, by his own admission, was in "a state of shock".