Leicester City slipped to their third league defeat in four games, and remained in the Championship relegation zone, as Matt Mills secured a Reading victory with a late goal at the Walkers Stadium.

Gylfi Sigurdsson's well taken goal was cancelled out by a stunning strike by returning midfielder Lloyd Dyer before Mills thundered in a header from a corner to leave the Foxes' with nothing. The defeat means it is Leicester's worst start to a league campaign in sixteen years.

Paulo Sousa made just two personnel changes from the side that started the dramatic Carling Cup second round win against Leeds United on Tuesday night, but also tinkered with the formation.

Moreno dropped back to centre half in place of Michael Morrison to accommodate skipper Matthew Oakley in the middle of the park, and Lloyd Dyer came in to midfield in place of Franck Moussa.

City switched to a 4-4-2 formation, with Paul Gallagher up front alongside Steve Howard. Michael Lamey made his first league at right back, whilst Conrad Logan kept his place in goal ahead of loanee Carl Ikeme.

Just like at Turf Moor a week earlier City made a lightning quick start to the game and had two good opportunities in the opening couple of minutes. Within 45 seconds Paul Gallagher had played in the returning Lloyd Dyer and his shot was deflected wide for an early corner.

A minute later Dyer turned provider, a surging run down the right flank saw him cross for Richie Wellens who headed well wide from inside the six yard box.

It took until the tenth minute for Reading to really produce an attack, smart work on the right flank found Brian Howard but his shot was well blocked by Michael Lamey.

Howard was then called into action at the other end of the field, he reacted to cut out Dyer's cross with Paul Gallagher shaping to shoot.

Six minutes later it was Dyer who again provided the threat for City cutting in from the right flank, only for his shot to take a deflection and drop harmlessly through to Federici.

Reading skipper Matthew Mills then headed wide from a deep right wing cross, but it should have served as a warning for what was to come for City.

Mid-way through the first half Moreno's mistake presented Jimmy Kebe with the ball and the Royals winger surged into the penalty area. Kebe only had a small area to fit the ball through but he managed it with aplomb and Gylfi Sigurddson dinked the ball over Conrad Logan for 1-0.For the fifth time in six games City had conceded the opening goal of the game.

On 33 minutes Leicester appealed for a penalty when Gallagher's clever touch sent Dyer through and he appeared to be shoved off the ball by Shane Cummings.

Towards the end of the first half Conrad Logan was twice called into action, first saving from Shane Long's close range header and then keeping out Jobi McAnuff's effort from outside the penalty area.

Five minutes into the second half Logan had to make another low save, as Long cut inside on to his right foot but couldn't get much purchase on his low shot.

When City went level just a minute later there was no surprise that it was Lloyd Dyer, ther game's outstanding player,who produced a moment of pure brilliance. The winger cut in from the right hand side and his low left footed shot was struck perfectly leaving Federici completley helpless as the ball whistled into the bottom corner.

Just before the hour mark Gylfi Sigurdsson went close to doubling his tally for the afternoon and helping Reading regain the lead. But his looping header from Howard's smart chip dropped just over the cross-bar.

Reading's attacks became more sporadic as the game wore on, but one slick passing moving opened City up. Church played a clever through ball to Jimmy Kebe, and it took an excellent save from Conrad Logan to deny the Malian a goal.

Leicester and Dyer again went close, after Reading failed to clear a right wing corner. Hobbs' clever ball back in found Wellens who passed to Dyer only for his fierce to be effort deflected out for a corner.

With twelve minutes to go Steve Howard had the chance to be City's hero again, Fryatt knocked the ball into his path but Howard from a tough angle shot well over the bar.

Soon after Matty Fryatt's left footed shot that concluded a quick break forward was tame and easy for Federici to deal with.

Federici's next save was a quality save, and a crucial one at that. Substitute Franck Moussa found space on the right and his chip found Dyer at the back post only for Federici to pull off a stunning stop.

That save from the Royals 'keeper proved even more important as Reading soon re-took the lead at the other end. Reading captain Matt Mills scored his third goal in a week to make it 2-1.

But Mills wasn't done yet. His captain's contribution continued in fine style, with Federici out of his goal, Steve Howard looked certain to equalise but his effort was headed off the line by Mills.

But it wasn't the last time the ball was cleared off the line, Richie Wellens had a header hacked away in stoppage time, before Andy King had a goal disallowed for an apparent foul by Matty Fryatt. Leicester's luck was out, as was time and Paulo Sousa's wait for a first league win continues.

City: Logan - Neilson, Berner, Hobbs, Moreno - N'Guessan, Oakley (c), Wellens, Dyer - Gallagher, Howard
Subs: Ikeme, Kennedy, Neilson, Morrison, Moussa (N'Guessan, 82), King (for Oakley, 63), Fryatt (for Gallagher, 55)

Reading - Federici - Gunnarsson, Pearce, Mills (c), Cummings - Karacan, Howard, Kebe, Sigurdsson, McAnuff- Long
Subs: Hunt, Antonio (for Gunnarsson, 45), Church (for Church, 62), Robson-Kanu, Hamer, Taylor, Davies

Attendance: 19,611