(CNN) -- Arsenal returned to the top of the English Premier League Thursday as previous leaders Liverpool slipped to fourth with a 2-1 defeat at fellow title challengers Manchester City.
A full Boxing Day EPL program saw a pair of Theo Walcott goals help Arsenal to a 3-1 win at struggling West Ham before Liverpool became the latest side to find City in unbeatable form at fortress Etihad Stadium.
The late kick off was a hard-fought affair and Liverpool took a 24th minute lead as Philippe Coutinho scored after Raheem Sterling beat the offside trap from a Luis Suarez pass.
Liverpool continued to make the running, but City equalized after 31 minutes when Vincent Kompany headed home from a corner.
Alvaro Negredo put the home side ahead on the stroke of halftime as his shot found its way past visiting goalkeeper Simon Mignolet following good work from Samir Nasri and Jesus Navas.
The second half saw chances for both title contenders, with Sterling missing the chance to level when he blazed over from a Suarez assist.
City leapfrogged Liverpool to move up to second and remain the favorite with most bookmakers to claim the title.
But earlier Arsenal returned to winning ways in timely fashion to beat West Ham at Upton Park.
Carlton Cole put West Ham ahead just after halftime before Walcott leveled with the first of his double inside three minutes.
German international Podolski set the seal on an excellent day for the Gunners by scoring after coming off the bench.
Arsenal manager Arsene Wenger praised the spirit of his league leaders after claiming the vital three points.
"We couldn't take our chances in the first half and we responded very well in second half, in the end winning the game in a convincing way," he told the Press Association.
"I am proud of the character of this team because they are always focused and try to do well."
Jose Mourinho's Chelsea also remained in the hunt in third place -- two points behind Arsenal -- with a 1-0 home win over Swansea.
Eden Hazard scored the only goal of the game in the first half, but Mourinho was left frustrated by their inability to press home their advantage.
"They kill me. Every game I'm tired in the end," he said. "At halftime we all should be relaxed with a comfortable result and we weren't."
Everton's challenge faltered with a 1-0 home defeat to Sunderland as all three bottom sides at the start of the day secured surprise away wins.
Crystal Palace beat Aston Villa 1-0 and Fulham overcame Norwich 2-1 with former England international Scott Parker grabbing the winner.
Parker's former team Tottenham Hotspur were held to a disappointing 1-1 home draw by West Bromwich Albion in the first game since Tim Sherwood was confirmed as manager.
Newcastle secured a seventh win in nine games against nine-man Stoke, who had Glenn Whelan and Marc Wilson sent off in the first half.
Oussama Assaidi had put Stoke ahead but two men short they were always struggling and Loic Remy scored twice as well as missing a first half penalty.
Cardiff fans protested against owner Vincent Tan before their side's 3-0 home defeat to Southampton, which leaves manager Malky Mackay's future in more doubt.
Jay Rodriguez scored twice for the Saints with fellow England international Rickie Lambert getting the other.