Goals from Branislav Ivanovic (2) and Didier Drogba have put the Londoners firmly in control of the tie after Fernando Torres had given the Reds the perfect start with the opener.
 
It means Rafael Benitez's men will need to score at least three goals in next week's second-leg at Stamford Bridge if they are to have any hope of progressing to the last four.
 
Prior to kick-off Liverpool had won all five Champions League knockout ties under Rafa Benitez when the first leg has been played on a Wednesday. It was a positive statistic but one that the hosts would not be able to preserve come the full-time whistle.
 
A high octane start had been too much for Real Madrid in the previous round and although Chelsea know all-too well what kind of reception to expect in L4, it was the home side who dominated the early exchanges.
 
On two minutes the first corner of the match almost resulted in the opening goal but Dirk Kuyt saw his ferocious shot from the edge of the box deflect inches wide of the far post.
 
It was agonisingly close for Liverpool but the buoyant home support didn't have too long to wait as the Reds drew first blood four minutes later.
 
A sublime back heel from Kuyt found Arbeloa marauding down the right and when he crossed low into the area Torres arrived on cue to steer the ball beyond Petr Cech for his 12th goal of the season.
 
It was the perfect start but one that was almost undone seconds later when Chelsea missed a glorious opportunity to level.
 
A mistake by Fabio Aurelio allowed Salomon Kalou to send Drogba through, but just when it looked inevitable he would score, Pepe Reina - who was making his 100th appearance in a UEFA club competition - came out and made a brilliant one-on-one save.
 
The chance seemed to raise the visitors' spirits and Florent Malouda went close with a left-footed drive from a tight angle before Reina once again came to the rescue to deny the rampaging Alex.
 
The Reds appeared to have lost their way a little and only Drogba will know how he didn't equalise just shy of the half hour mark when he blazed Michael Ballack's low cross high into the Kop end.
 
Arbeloa then outfoxed Malouda and curled an audacious left-footer just wide before the away side stunned Anfield with a 39th minute equaliser.
 
A corner from the right was delivered into the heart of the Reds' area where Ivanovic rose unmarked to power a header beyond Reina.
 
It was a huge body blow for Benitez's men who had now surrendered the initiative after a super-charged start that was reminiscent of the Luis Garcia inspired semi-final victory of 2005.
 
The remainder of the first-period seemed to pass by in a blur and as the players returned to the field following the interval, they were well aware that a second-half onslaught at the Kop end was required more than ever.
 
The inspirational Steven Gerrard had been a peripheral figure in the first 45 and he was first to show with a purposeful run and shot that was just off target.
 
It should have been a moment to lift the Liverpool players, but within seconds they were grateful for the intervention of the side's other local star, Jamie Carragher.
 
Once again Drogba was sent racing through on goal and although he managed to fire a shot beyond Reina, the Reds' vice captain arrived just in time to complete an acrobatic goal-line clearance.
 
Torres was next to go close when he raced onto Gerrard's cute flick header before drilling his shot over the upright.
 
At this point the tie was finely poised but a five minute period just past the hour mark saw Guus Hiddink's men take a huge step towards the semi-finals.
 
The Reds had struggled to cope with set pieces all night and when a left-wing corner was whipped to the far post Ivanovic arrived to thump another header past Reina.
 
If that was a major setback, then the third was a disaster.
 
A lighting break down the left flank saw Malouda cross low for Drogba who gleefully swept home from inside the six yard box.
 
The Reds had it all to do if they were to get themselves back in the tie, but despite pressing for the final 20 minutes they never looked like finding the lifeline and will now head to the Bridge next Tuesday needing a minor miracle to progress.

Teams

Liverpool: Reina, Aurelio, Carragher, Skrtel, Arbeloa, Riera, Alonso, Leiva, Kuyt, Gerrard (c), Torres. Subs - Agger, Babel, Benayoun, Cavalieri, Dossena, Hyypia, Ngog
 
Chelsea: Cech, Cole, Terry (c), , Ivanovic, Malouda, Ballack, Lampard, Essien, Drogba, Kalou. Subs - Anelka, Belletti, Carvalho, Hilario, Mancienne, Obi Mikel,
 
Referee: Claus Bo Larsen (Den)
 
Conditions:
 
Attendance: Unavailable
 
Liverpoolfc.tv Man-of-the-Match: Xabi Alonso

Breakdown

1 min : Lampard and Drogba kick off
2 mins : Torres wins a corner...
3 mins : It comes out to Kuyt...he volleys it towards the top corner but Ivanovic heads to safety
5 mins : Lampard swings one in...Lucas heads away
5 mins : Fabio wins a free kick from Kalou...decent position down the left
6 mins : Liverpool happy to keep possession
6 mins : GOAL! Fernando Torres: Kuyt backheels, Arbeloa crosses and El Nino tucks beyond Cech into the bottom corner
7 mins : Mis-timed pass from Fabio lets Drogba through but Reina saves well... Good job, Pepe
10 mins : The linesman doesn't seem to have a clue...Carra is waving his arms in disbelief after he allowed a Chelsea attack to continue after a blatant offside
14 mins : Brilliant crossfield ball from Xabi...Kuyt gives it to Lucas, whose cross is nodded clear
14 mins : Gerrard fizzes the ball to Lucas...he just can't control it in the box
15 mins : Brave block from Skrtel to thwart Lampard on the edge of the box
15 mins : Ironic cheers as the linesman at last flags for offside...Drogba looks peeved
16 mins : Aurelio floats one in but Cech gets there before Torres
17 mins : Alonso outpaces Ballack in midfield and tries a weighted ball to Torres...it's too close to Alex
18 mins : This is better than the usual dour first legs between these sides
18 mins : Kalou is on the floor...the stretcher's on. Oh well, gives us chance to savour replays of the goal
19 mins : Kalou back on his feet SHOCK
19 mins : The Kop are singing about some block called Luis...
20 mins : Lampard's free-kick hits the wall, much to Anfield's delight
21 mins : The Kop is indicating it is going to bounce in a minute...
21 mins : Riera wins a free-kick in a great area...but Fabio hits it straight into Cech's hands
22 mins : Barca 2-0 Bayern
22 mins : Now Alex's free-kick is straight into the wall
24 mins : Malouda could be in here...oh, he fires wide across the face of goal...Chelsea enjoying the better possession at the moment
25 mins : Mistake by Carra and Skrtel has to clear for a corner
25 mins : Great chance for Malouda again...oh, that's really clever goalkeeping from Reina
26 mins : Torres is away...he cuts back...going to try a curler over Cech...just over
27 mins : Alonso does well to regain possession...Chelsea look vulnerable here...passes to Lucas...oh dear
29 mins : Ballack finds Drogba...he slips...he recovers....must score....how did he fire over from there?
29 mins : Torres nutmegs Ashley Cole...but the England man uses every inch of the law to stop our man getting through...clever defending
30 mins : First Booking: Salomon Kalou:
32 mins : Alonso finds Albert down the left but the Spain international's cross is too fast and some
34 mins : Excellent tackle from Xabi...Lucas then finds Gerrard and it looks like we're away until Ballack fouls Gerrard
35 mins : Alonso makes Ballack look REALLY silly
35 mins : Alvaro left footer from the edge of the box! It's not far away either...he started the move, so had every right to have a go
37 mins : Quality clearance from Carra
38 mins : Lampard effort deflected for a corner...Kalou gets it...Stevie tackles well
39 mins : GOAL! Branislav Ivanovic: Lampard corner is headed home by an unmarked Ivanovic
40 mins : Kuyt through...must score...corner
44 mins : We need to get Stevie into the game
45 mins : Barca now 4-0 up
19:31 GMT : Half Time Reached
19:46 GMT : Second Half Begins
46 mins : Dirk and Fernando get to second period up and running
46 mins : Torres fouled 22 yards out...
47 mins : Fabio's in-swinger has far too much pace
48 mins : Kalou stops Torres in his tracks down the left
49 mins : Riera forces a corner out of Ivanovic
50 mins : Right foot effort from the skipper...just wide
51 mins : Just seen a stat which revealed we had 59 per cent possession in the first half. To be honest, it didn't feel like it
51 mins : Carra clears off the line to stop Drogba scoring...corner
52 mins : Riera heads clear but we're on the back foot
52 mins : Lampard tries one...Reina gathers
53 mins : Beautiful football...Riera to Gerrard to Torres...but our number nine whacks it over the bar and into the Kop
57 mins : Ridiculous backpass from Frank gives us a corner...Essien heads clear
58 mins : Now the stretcher is on for Essien
59 mins : Essien okay SHOCK
59 mins : Skrtel mis-kicks clearance and it's a corner to the visitors ¿Riera clear
59 mins : It's back in ¿Pepe and Terry collide and there's a bit of bother in the box ¿both players are down
61 mins : First Booking: John Terry:
62 mins : Gerrard and Terry having a row...
62 mins : GOAL! Branislav Ivanovic: Unmarked again
65 mins : Nice football from Lucas and Alvaro but the latter just can't find Gerrard's run
67 mins : GOAL! Didier Drogba:
68 mins : Substitution: Yossi Benayoun for Albert Riera:
71 mins : Drogba shoots straight at Reina...Liverpool need to regroup - and quickly
74 mins : First Booking: Fabio Aurelio: Foul on Kalou
76 mins : Substitution: Andrea Dossena for Fabio Aurelio:
77 mins : Lucas can shoot...but he mis-hits it
78 mins : Drogba crosses...this could be carnage...is this going to be an OG from Dossena? Well in Pepe...good goalkeeping
79 mins : Substitution: Ryan Babel for Lucas Leiva:
79 mins : Substitution: Nicolas Anelka for Didier Drogba:
82 mins : Brilliant battling from Dirk
84 mins : Well, we won 4-1 at Old Trafford, we can do it at Stamford Bridge
86 mins : Corner...
87 mins : Yossi takes but it's headed clear by the first man, Lampard
88 mins : Gerrard tackles Anelka but now Chelsea have a corner kick
89 mins : Frank is through on goal here...Pepe is rushing out...the Spaniard does well
90 mins : The linesman calls a goal kick but he's overrulled...nice one Claus
90 mins : It's wasted, though
90 mins : Echoes of YNWA from the Kop
90 mins : Babel's running at the Blues backline...he loses it
90 mins : Torres to Benayoun...he takes a shot...the chance has gone
90 mins : Alonso shoots...great save from Cech...corner
20:34 GMT : Match Over