Tim Cahill admits Everton are in 'a lot of trouble' after the derby defeat and must work hard to get out of it.
David Moyes' side lost 2-0 to Liverpool at Goodison Park on Sunday to leave them just three points above the drop zone in 16th.
It is a far cry from last season when the Toffees finished fifth and Cahill admits they are in a real fight to pull away from the drop zone.
While he believes the Toffees are too good to be where they are, he says the players need the right mental attitude to push up the league.
Cahill told the Liverpool Echo: "I think that's the best we've played in a while. Our passing was good, we made lots of space with our movement and had two disallowed goals.
"We were strong from corners too. It's hard to take, but at this stage it's not going to get any easier.
"We're in a lot of trouble - the only way we can get out of it is by playing and working our way out of it."
He added: "We're too good to be in this position. It's just one of those things and nothing's going to fix it except our mental attitude as individuals and a team.
"I'm a lot more positive though - we played better football and had a much better attitude."
Cahill himself spurned a great chance in the second period but saw Jose Reina save his header before the keeper then denied Marouane Fellaini's follow-up.
He added: "I'm gutted I didn't score. You always think keeper's left hands are weaker than their right but with Pepe at the minute he's just as strong on his left as his right."