Holt had moments earlier missed a glorious chance to win it for City when he was clean through but denied by excellent Australia international Adam Federici - on his 100th league start.
However, he made no mistake when presented with another opportunity in the fourth minute of injury time, converting his 14th goal of the season.
Norwich took the lead in the 16th minute when Henri Lansbury, on loan from Arsenal, netted for the second successive home game but Reading levelled 10 minutes later through Republic of Ireland striker Shane Long with his 14th goal of the season.
The visitors were reduced to 10 men in the 65th minute when Jem Karacan was sent off for a bad tackle on David Fox.
Andrew Surman, making his return after a knee injury sustained in November, hit the crossbar from 20 yards just five minutes after coming on and Federici then thwarted Norwich on several occasions before Holt came to the rescue.
Source: PA
Source: PA