David Nugent crashed in from Jamie Vardy's chested pass and Jeff Schlupp drilled in from the edge of the box.
Liverpool's Lazar Markovic missed a late free header as Leicester held on.
Manager Nigel Pearson had called on Leicester to build on Sunday's away win at Hull with another positive result and his players produced a hugely encouraging display that keeps the Foxes within four points of safety.
Liverpool were flattered by their 2-0 half-time lead and produced a stuttering performance devoid of the verve that had captivated Anfield during Monday night's 4-1 demolition of Swansea.
That result had prompted a positive missive from the club's American owners, but Tom Werner and John Henry will no doubt be as dismayed as manager Brendan Rodgers to have seen the Reds play so poorly against opposition they had swept aside at the start of December.
The visitors served notice of their threat in the first minute. A curling free-kick from Riyad Mahrez caught Simon Mignolet by surprise as it cannoned off the near post.
Leicester's bright start continued as Mahrez met Schlupp's low cross from the left but clipped his shot high and wide.
Liverpool made the visitors pay by taking the lead from a contentious Gerrard spot-kick.
Foxes captain Wes Morgan was penalised by referee Mike Jones for handling Raheem Sterling's cut-back, but replays showed the ball struck the Leicester defender clean in the face.
As the half wore on, Liverpool began to dictate and were rewarded with another penalty, only slightly less dubious than the first.
Coutinho's pass struck Danny Simpson's slightly outstretched arm, and Gerrard stepped up to slot away his 31st Premier League penalty in 39 attempts.
Leicester's revival was as spectacular as it was unexpected.
Nugent started it off with a superb dipping strike after Vardy had chested Mathew James's pass into his path.
And, moments later, with the hosts still shell-shocked, space opened up for Schlupp to fire a low drive past Mignolet from the edge of the area.
Both sides pushed for a winner in a frenetic closing spell, with substitute Markovic meeting Sterling's cross, only to plant his header into the Kop.
Steven Gerrard has scored 16 of his last 21 Premier League goals from the penalty spot
Leicester's players complained to referee Mike Jones over both penalty calls
David Nugent scored his first league goal since Leicester’s 5-3 win over Manchester United, 12 games ago.
Jeff Schlupp ensured Leicester collected their first point at Anfield since May 2000
Lineup, Bookings (4) & Substitutions (6)
Liverpool
- 22 Mignolet
- 23 Can
- 04 K Touré
- 17 Sakho
- 14 Henderson
- 08 Gerrard Booked
- 21 Lucas Booked (Markovic - 72' )
- 18 Moreno (Lambert - 85' )
- 10 Coutinho
- 31 Sterling
- 20 Lallana (Borini - 55' )
Substitutes
- 06 Lovren
- 09 Lambert
- 19 Manquillo
- 29 Borini
- 50 Markovic
- 52 Ward
- 54 Ojo
Leicester City
- 12 Hamer
- 17 Simpson
- 27 Wasilewski Booked
- 05 Morgan
- 02 de Laet
- 26 Mahrez
- 08 James Booked
- 04 Drinkwater (Nugent - 37' )
- 07 Hammond (Cambiasso - 67' )
- 15 Schlupp
- 09 Vardy (Ulloa - 75' )
Substitutes
- 16 Lawrence
- 18 Moore
- 19 Cambiasso
- 23 Ulloa
- 24 Knockaert
- 31 Smith
- 35 Nugent
Ref: Mike Jones
Att: 44,720
Live Text Commentary
Full time
90:00 +2:56 Corner, Liverpool. Conceded by Esteban Cambiasso.
90:00 +1:31 Foul by Mamadou Sakho (Liverpool).
90:00 +1:31 David Nugent (Leicester City) wins a free kick on the right wing.
90:00 +0:53 Attempt blocked. Riyad Mahrez (Leicester City) left footed shot from outside the box is blocked.
90:00 +0:06 Booking
89:59 Jeffrey Schlupp (Leicester City) wins a free kick in the attacking half.
89:44 Attempt saved. David Nugent (Leicester City) left footed shot from a difficult angle on the left is saved in the bottom left corner. Assisted by Leonardo Ulloa with a through ball.
89:06 Foul by Fabio Borini (Liverpool).
89:06 Matthew James (Leicester City) wins a free kick in the attacking half.
88:24 Booking
85:33 Corner, Liverpool. Conceded by Ben Hamer.
85:24 Attempt saved. Jordan Henderson (Liverpool) left footed shot from the left side of the box is saved in the centre of the goal.
84:48 Corner, Leicester City. Conceded by Emre Can.
84:27 Substitution
Full Time Match ends, Liverpool 2, Leicester City 2.
90:00 +4:03 Full time
Full Time Second Half ends, Liverpool 2, Leicester City 2.
90:00 +3:22
Attempt missed. Steven Gerrard (Liverpool) right footed shot from
the left side of the box is high and wide to the right. Assisted by
Philippe Coutinho following a corner. 90:00 +2:56 Corner, Liverpool. Conceded by Esteban Cambiasso.
90:00 +1:31 Foul by Mamadou Sakho (Liverpool).
90:00 +1:31 David Nugent (Leicester City) wins a free kick on the right wing.
90:00 +0:53 Attempt blocked. Riyad Mahrez (Leicester City) left footed shot from outside the box is blocked.
90:00 +0:06 Booking
Booking Steven Gerrard (Liverpool) is shown the yellow card for a bad foul.
89:59 Foul by Steven Gerrard (Liverpool). 89:59 Jeffrey Schlupp (Leicester City) wins a free kick in the attacking half.
89:44 Attempt saved. David Nugent (Leicester City) left footed shot from a difficult angle on the left is saved in the bottom left corner. Assisted by Leonardo Ulloa with a through ball.
89:06 Foul by Fabio Borini (Liverpool).
89:06 Matthew James (Leicester City) wins a free kick in the attacking half.
88:24 Booking
Booking Matthew James (Leicester City) is shown the yellow card.
88:14
Attempt missed. Lazar Markovic (Liverpool) header from the centre of
the box misses to the left. Assisted by Raheem Sterling. 85:33 Corner, Liverpool. Conceded by Ben Hamer.
85:24 Attempt saved. Jordan Henderson (Liverpool) left footed shot from the left side of the box is saved in the centre of the goal.
84:48 Corner, Leicester City. Conceded by Emre Can.
84:27 Substitution
Substitution Substitution, Liverpool. Rickie Lambert replaces Alberto Moreno.
83:53
Attempt missed. Riyad Mahrez (Leicester City) left footed shot from
the right side of the box misses to the left following a corner. 
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