Disappointed Cardiff manager Dave Jones praised his players for not giving in after their unbeaten Championship record was dented by Birmingham.
Goals by James McFadden in the fifth minute and Quincy Owusu-Abeyie four minutes from the interval were enough for the Bluebirds to lose their unbeaten record.
Despite having most of the play in the middle of the park, Cardiff were unable to penetrate a strong Blues rearguard until Ross McCormack drove in his sixth goal of the season in the 87th minute.
"The players kept going throughout the game and we had the majority of the play but their defence played well," said Jones.
"We fell asleep to give them their early goal and the same thing happened for their second. It's frustrating for us but after keeping so many clean sheets we have switched off twice and it has been very costly.
"We are trying to get a pattern of play with a good delivery but our final ball lets us down at times."
It was the Blues who opened the scoring in the fifth minute when Owusu-Abeyie cut inside before slipping a pass for Scottish international McFadden, who calmly slotted into the corner of the net with the home defence appealing for offside.
The Bluebirds then began to push Birmingham back and Ross McCormack and Joe Ledley both went close before Blues skipper Lee Carsley cleared a Roger Johnson header off the line with Taylor beaten.
In the 41st minute, totally against the run of play, Owusu-Abeyie netted the Blues' second when he received the ball from a throw-in, turned and fired into the corner of the net with the home defence motionless.
Cardiff brought on American international Eddie Johnson along with Mark Kennedy in the 76th minute in an effort to rescue something from the game.
But despite having most of the ball they were still unable to carve out any clear-cut openings.
The busy McCormack scored in the closing stages but despite continuing to press, the Bluebirds were unable to find an equaliser.
"We defended well against some real pressure and to score twice from only three shots on goal was a bonus," admitted Birmingham boss Alex McLeish.
"I'd really prefer us to go at teams rather than sit back and soak up the pressure," he added.
"But we defended very well and I don't think Cardiff had many clear-cut chances."