Sherwood praised the improvement of the Merseyside outfit this season and admitted that they stood a chance of ending their 24-year wait for a league title, but he still believes that City hold the edge over them and Chelsea.
"I would still go with Manchester City. Liverpool have done a fantastic job, from last season to this is chalk and cheese. They are still in this race," Sherwood told reporters.
"The players they have in the final third are sensational. They run and graft. If they tighten up a bit I think they have a good chance."
Today's defeat leaves Spurs four points behind fifth-placed Everton having played a game more than the Toffees.