Manchester City manager Manuel Pellegrini admitted he was concerned about his team's form after being dumped out of the Capital One Cup by Newcastle.

The holders slumped to a shock 2-0 defeat at the Etihad Stadium on what proved a dismal night in more ways than one ahead of Sunday's eagerly-anticipated derby against Manchester United.

City have not only relinquished their grip on one of the two trophies they won last season and lost their sparkle in a run of three successive winless games, but two key players are nursing injuries.

Playmaker David Silva - surprisingly not rested along with Sergio Agüero, Vincent Kompany and Joe Hart - limped out of the action early and Yaya Touré was later withdrawn as a precaution.

After a slow start in both the Barclays Premier League and Champions League, Pellegrini said afterwards that his side is low on confidence.

The Chilean said: “My feeling is that we are not playing well. We are in a difficult moment with a lack of trust. We are conceding too (many) easy goals and we are not scoring the chances we have to score. That’s the feeling at this moment.

“It’s a lack of confidence that we must address as soon as possible because we need to continue to be involved in the other competitions.

“Of course we must be worried — we didn’t win the three games we played this week. We must be worried about that but we must find a solution and we must address it.

“We will see with the players which is the way to try and recover that confidence because it’s not normal to see this team playing the way we are now.”

City will anxiously await updates on Silva and Touré, but the former certainly looks doubtful for the visit of United.

Pellegrini said: “We will see (on Thursday) with the doctor. I can’t tell you now exactly at this moment. David has a problem in his knee. I don’t know how serious it is.

“Yaya was a little bit tired with his groin so I didn’t want to risk him (any longer).”

Pellegrini, who made seven changes, claimed he had no regrets about the selection of Silva.

“There was no reason David could not play. We played on Saturday, we had four days to recover. David was perfect to play.”

Newcastle, who made six changes, actually looked weak on paper but it was the visitors who prevailed with goals from Rolando Aarons and Moussa Sissoko in a whole-hearted display.

Manager Alan Pardew said: "We don't ever come not to win. We had a gameplan. The players needed to execute it but I couldn't ask for more than they gave me.

“It was outstanding in discipline and the way they carried the threat all night. “The pace in wide areas is something that I think is an asset for us.”

Pardew also hailed the performance of defender Ryan Taylor, who not only returned to action after a two-year absence with a knee injury but was actually one of the most influential players on the pitch.

The 30-year-old, who created the first goal and almost set up another in a highly-energetic performance, had been sidelined since August 2012.

Pardew, whose side will play Tottenham in the quarter-finals, said: “Obviously he was outstanding. Professional footballers sometimes get a bad press for the way they conduct themselves and their professionalism but you are talking about a guy who for two years has been injured and conducted himself in the best possible manner.

“He came in with a smile on his face, encouraged players in those two years. He got his reward because of that professionalism. He has only had one and a half reserve games and to play like he did was absolutely outstanding and a credit to himself.

“Our staff have been very impressed with his conduct. He is a beacon of light in professional football. We are delighted we have been able to give him a platform but he had 10 good players around him and we couldn’t have asked for more.”