After seeing his team defeated 2-1, O'Neill said: "Liverpool are definitely capable of mounting a title challenge with Manchester United, Chelsea and Arsenal without any question.
"In the second half we tried to get back into the game and once we got the equaliser I thought we would be capable of holding on and maybe even winning the game.
"But it was a great strike from Gerrard. I believe once we get more belief that we can play a bit then we will be much, much better.
"At the end of the first half we lost a bit of self-belief and I was quite pleased not to concede a second goal by half-time."