The Clarets suffered more late heartache as an injury- time goal from Chris Burke stretched Burnley's losing run to four games.
Marvin Bartley's second and potentially most important goal yet for the Clarets had seemingly earned Eddie Howe's men a valuable point as they battled back from going behind to an early Jean Beausejour strike.
But just when it looked as though a gutsy second-half performance would stop the rot against a Birmingham side unbeaten at home this season, Burke struck at the death to leave the Clarets - also undone by a late goal at home to Leeds United last Saturday - too near the drop zone.
The Clarets, with Ross Wallace back from injury and loan man Sam Vokes replacing the injured Charlie Austin, had got off to the worst possible start as Birmingham went ahead after just two minutes with their first attack of the game.
Hard to take
Jay Rodriguez nearly sneaked in at the other end as City goalkeeper Boaz Myhill was baled out by defender Curtis Davies but when City worked their way forward they swiftly drew first blood.
Burke, whose form has kept former Clarets' wingman Wade Elliott out of the Blues' starting line-up, was heavily involved and when he played a one-two with Nikola Zigic he was faced with just Lee Grant to beat.
Grant made an excellent save to touch his effort onto the bar but when the ball broke for Beausejour, the Chilean international pounced to lash an angled drive into the roof of the net.
Jean Beausejour puts the Blues ahead
With Burnley on the back foot, it was then backs-to-the-wall stuff for a spell as they battled to stay in the game.
Burke was almost in again when Stephen Carr's lovely ball over the top was not matched by the Scot's poor first touch, while giant striker Zigic was a predictable threat in the air from set-pieces.
Left unmarked from a David Murphy free-kick with 25 minutes gone, the Serb headed wastefully over the top.
Keith Treacy heads wide
But that miss was nothing compared to the sitter King contrived to pass up ten minutes later as Burnley, having just shown the first signs that they might be capable of creating an equaliser, were handed a remarkable reprieve.
This time Zigic created the chance after robbing David Edgar but from his square pass King somehow missed the gaping target with a side-foot finish from no more than eight yards out.
And Burnley, who had got little change out of a Birmingham defence marshalled by ex-Clarets' skipper Steven Caldwell and which had previously conceded only two goals at home all season, made the most of their let-off to grab a leveller four minutes into the second half.
Jay Rodriguez battles with former team-mate Steven Caldwell
With Wallace striking a free-kick against the City wall and out for a corner, he was given a second chance to deliver following a short corner taken by Keith Treacy.
And when the ball was cleared only as far as Bartley just outside the penalty area, the midfielder connected with a vicious volley which fizzed towards the target before being deflected into the roof of the net.
The goal visibly lifted the Clarets as they enjoyed their best spell of the game and Birmingham stared at the prospect of a repeat of the two points they let slip in similar circumstances against Peterborough three days previously.
Keith Fahey tried to bring the Blues back to life with a fierce drive that flew just over the bar but with the Clarets, again led by Michael Duff, defending more resolutely and competing better in midfield, where Dean Marney shrugged off a knock suffered moments after replacing skipper Chris McCann, they were kept at arm's length.
Marvin Bartley levels it up
Zigic did get a sight of goal from a Nathan Redmond cross but his downward header was off target and with Andre Amougou sent on for the hard-working Treacy for the final few minutes the Clarets were within touching distance of a valuable point.
But a minute into added time Murphy burst forward one last time for the Blues and from his low cross, Burke timed his run perfectly to ram the ball home and break Burnley hearts.
But Birmingham have the last word
Burnley: Grant, Trippier, Easton, Duff, Edgar, Bartley, McCann (Marney 59), Wallace, Rodriguez, Vokes, Treacy (Amougou 88). Subs: Hines, Stanislas, Stewart.
Booked: Easton 87
Birmingham City: Myhill, Carr, Murphy, Davies, Caldwell, Spector, Burke, King (Wood 88), Beausejour (Redmond 69), Fahey, Zigic. Subs: Ibanez, Elliott, Doyle.
Booked: Murphy 67
Referee: Robert Madley