Birmingham were relegated to the Championship after they lost to Roman Pavlyuchenko's late goal for Tottenham, who sealed fifth place with the win.
With results elsewhere going their way, City seemed safe when Craig Gardner equalised after substitute Pavlyuchenko had given Tottenham the lead.
But Wolves' second goal in their 3-2 defeat by Blackburn put Alex McLeish's side back in the bottom three.
And Pavlyuchenko's last-minute strike confirmed the Blues' fate.
It was a crushing end to what has been a rollercoaster season for Birmingham, who won their first trophy for 48 years with a last-gasp 2-1 win over Arsenal in the Carling Cup final at Wembley in February, but have been battling relegation for most of the campaign.
They went into the game knowing a win would likely keep them up, but defeat, coupled with events elsewhere - particularly Wigan's 1-0 win at Stoke and Wolves' second goal against Blackburn - proved their undoing.
For Tottenham, qualification for the Europa League is a consolation prize after their failure to secure a second successive season of Champions League football.
However, qualifying for the lesser European competition via a fifth-place finish was preferable to Spurs achieving it through Uefa's Fair Play league, which would have meant the team having to play in the early rounds in only five weeks' time.
This was a victory born out of Spurs' commitment to attack, which may not have helped them achieve their ultimate aim, but ensures it has been a good, if not great season.
The reasons behind Birmingham's plight are simple: scoring too few goals and conceding too many.
They are the division's lowest scorers with 37, which by itself is not a recipe for disaster as their impressive ninth place finish last season off the back of 38 goals scored demonstrated.
However, in the absence of regular centre-back Scott Dann for much of the season through injury, the solid defence on which City built their success in 2009-10 has looked shaky and, crucially, they conceded 11 more goals than last term.
Knowing the threat Tottenham pose going forward, even without injured attacking midfield duo Gareth Bale and Rafael van der Vaart, McLeish sent out a team focused on frustrating Spurs and hoping to snatch a goal on the break.
For the first half, they performed the first part of this superbly, with a back four - led by the towering Curtis Davies, who marked the lofty Peter Crouch out of the game before the striker went off with a head injury after 39 minutes - holding firm behind an industrious and committed five-man midfield, that included Jean Beausejour tracking back from his striking position.
They frustrated the home side, who found themselves allowed plenty of possession in 70% of the pitch, but were harried out of it in the remaining 30% closest to the Birmingham goal.
Unfortunately, this nullified City's threat at the other end, where Cameron Jerome found himself isolated up front and too often running without support down blind alleys, where packs of Spurs defenders lurked to rob him of possession.
All the first-half chances were Tottenham's. Sandro twice drew good saves from Ben Foster, first with a shot from a tight angle, which the keeper put behind with his foot, and then with a 20-yard drive that was tipped over.
Foster was also called on to claw away a cross-come-shot from Younes Kaboul late in the half and save a long-range strike from Luka Modric.
The danger for Birmingham in adopting such a containing approach was whether they would be able to then switch instantly to a more progressive style should it be required.
This was put to the test four minutes into the second half when Pavlyuchenko, on for Crouch, curled a superb shot past Foster from 20 yards to put Spurs ahead.
The visitors initially struggled to impose themselves on the game, but were given a lifeline when the ball fell to Gardner after a corner and the midfielder connected superbly to give Carlo Cudicini no chance from the edge of the box.
Gardner then curled a free-kick just over as a buoyant, and at this stage safe, City pushed for a second goal.
But their failure to do so suddenly became crucial when Wigan took the lead at Stoke to move out of the relegation zone, soon to be followed by Wolves via their second goal against Blackburn - putting Birmingham back below the safety line.
Any lingering hope of escape for the Blues was extinguished when Pavlyuchenko rifled in his second from 16 yards with the last kick of the game.
