Stephen Hunt scored from the spot in the 15th minute only for Steven Gerrard to lkevel for Liverpool making it 1 - 1 at half time.
But those at the Madejski and those watching on Setanta were treated to two goals in 7 mins by Kevin Doyle and James Harper to stun Liverpool and condemn them to their first defeat of the season.
Reading are in 12th place after the weekend's action.