Arsenal, who had been the early pacesetters after winning their opening nine games in their quest for a first WSL title since 2012, hosted Chelsea in a huge London derby on Sunday and were beaten for the second time in three games following defeat to City in December.
A brace from Chelsea midfielder Erin Cuthbert put the visitors 2-0 up, with a late strike from Dutch forward Vivianne Miedema no more than consolation for the stumbling Gunners.
Chelsea had endured a disastrous start to their WSL title defence back in the autumn. They started the season with three consecutive 0-0 draws and failed to score a goal in five of their opening six games, a run which included a 5-0 thrashing at home against Arsenal in October.
Now, Chelsea are very much the WSL's form team after winning seven games in a row.
A point ahead of Arsenal, who can at least cling onto the fact that they have a game in hand on their rivals, and three ahead of Chelsea, unbeaten Manchester City are the new WSL leaders after securing a 3-1 away win over West Ham this weekend.
Kudos to @emmahayes1 & @ChelseaFCW. October 21 they were EIGHT points behind leaders @ArsenalWFC and most people had written them off.— Jo Currie (@JoCurrie) January 13, 2019
They’re now just TWO points behind. Long way to go but they’re right back in this @FAWSL title race.
And I now have a new favourite GIF... pic.twitter.com/vmqeDILHMI
Caroline Weir and Lauren Hemp gave City a 2-0 half-time lead. Ex-sky blues striker Jane Ross pulled one back for the Hammers, but Nikita Parris went on to make it 3-1 to City late on.
West Ham gave immediate debuts to new high profile international signings Adriana Leon and Cho So-hyun and will hope to now kick on for a strong end to their maiden season at this level.
Fourth place Birmingham, who are losing manager Marc Skinner to Orlando Pride in the United States, lost ground in their bid to stay in contention with the top clubs after being surprisingly beaten at home by Bristol City. A single goal from Bristol's Gemma Evans condemned the Blues to a second defeat in three games.
Further down the table, Liverpool finally put an end to a long win-less league run that stretched back to October as they snatched a dramatic late victory against bottom club Yeovil. Courtney Sweetman-Kirk won it from the penalty spot in the 93rd minute, her second of the game, for the Reds to win it 2-1 after Yeovil's Emily Donovan had cancelled out the first.
Elsewhere, second from bottom Everton put an invaluable further point between themselves and Yeovil in the relegation zone by holding Brighton, who hit the bar early on, to a 0-0 draw. The Seagulls remain in ninth place, only two points further ahead of the Toffees.
The Women's Super League returns for the next round of fixtures on Sunday 27th January, when Arsenal travel to Reading, Chelsea host Birmingham and Manchester City meet Brighton.