The defeat casts immense doubt on Liverpool's ability to challenge for the championship. But according to Benitez, winning trophies is not what the game is all about.
In the build-up to yesterday's game, Benitez insisted: 'I don't agree with people when they say you have to win trophies. I always say the same, you have to be there. Youhave to improve, you have to create a group of players who can fight for trophies.
Empty handed: But Benitez says you don't need to win trophies to be successful
'We got 86 points in the Premier League last year and some people say it wasn't a good season for us. But to finish second and reduce the gap to four points was a massive achievement.
'So it depends, trophies mean a lot for everyone. But to see the progression of the team means you can guarantee that you will be there in the future and that you can fight for the trophies.'
Many managers, especially those who, like Benitez, appear to have fallen short of expectations in the trophy department, could not hope to survive such an extraordinary admission. But Benitez will be safe from the sack even if his side do crash out of the Champions League this week.
He goes into Wednesday's £15million match against Lyon with assurances about his long-term future from Spanish-speaking managing director Christian Purslow, the man who now holds the real power at Anfield rather than lame duck owners Tom Hicks and George Gillett.
Purslow's backing is vital, as he is the eyes and ears of the Royal Bank of Scotland, with whom Hicks and Gillett had to refinance a £350million loan in the summer.
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An indication of how the power base has shifted at the club came when Gillett was hauled into line recently after telling supporters' groups that Benitez was to blame forLiverpool's indifferent start to the season.
The hapless American was forced to do a quick U-turn and hail the Spaniard as the best manager in the Premier League.
Even though Benitez had to fight off speculation about his future before last Sunday's face-saving win against Manchester United, the truth is Hicks and Gillett no longer have the power to sack him and sanction a £20m pay-off without Purslow'sagreement.
Benitez was defiant after yesterday's defeat at Fulham, insisting that he does not feel under pressure, despite a nightmare series of results punctuated only by the victory over United last Sunday.
'I had the same question before United but after that everything changed,' he said.
'In football, you have to keep calm and try to find solutions. When you are not winning, you have analyse why. You all saw the game against United. We are confident we can turn things around.'
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Liverpool need a win in France on Wednesday to keep their Champions League hopes alive after defeats against Fiorentina and at home to Lyon. Elimination from the group stages would cost Liverpool an estimated £15m and hit Benitez's ability to spend during the transfer window.
Benitez, who has not won a trophy since leading Liverpool to the FA Cup in 2006, is aware of the flak he will get if Liverpool crash out, but he is adamant that it will not detract from his and Purslow's long-term goals and he argues that his real job is to maintain Liverpool's position among the country's elite.
But he does accept that his transfer budget will be cut if Liverpool do not reach the knockout stages of the Champions League, although he insists: 'It will not make a massive difference when you look at the long term. We are looking beyond just thenext transfer window.'