Klopp’s side saw their 10-match unbeaten run in all competitions ended by Lookman’s second half strike.
Liverpool trail leaders Manchester City by six points, with the champions playing at Brentford this evening.
Beaten for the first time since their 3-2 loss at West Ham in November, second placed Liverpool paid the price for missed chances.
Crucially, Kasper Schmeichel saved Salah’s first half penalty as Liverpool failed to score in the league for the first time since March.
“We were just not good enough. We still had enough chances. What we did with the ball was just not right. We played a really bad game,” Klopp said.
“We should have defended better. We do that usually, why we didn’t do it today is hard to explain. There were so many performances below the normal level.”
Liverpool’s flop against COVID and injury ravaged Leicester, who were hammered 6-3 by City on Sunday, puts extra pressure on them to take maximum points at title rivals Chelsea in their first game of 2022 on Sunday.
“It’s a big gap. In this moment it is not my problem. If we play our normal football, Liverpool football, we have the chance to win more games,” Klopp said.
“The first thing is not to do it ever again like this. We lost our rhythm and weren’t calm enough to get it back. That is our fault.”
Leicester boss Brendan Rodgers added: “It’s an absolutely heroic performance. An amazing result for us with everything we’re going through against one of the best teams in the world.”
Liverpool had more rest than Leicester over Christmas after a Leeds COVID outbreak forced the postponement of their game on Sunday.
Back in action only 48 hours after their thrashing at City, Leicester were unable to field a recognised centre-back for a rematch of the League Cup quarter-final won by Liverpool on penalties last week.
Liverpool, bolstered by Virgil van Dijk’s return from COVID, looked set to take advantage of Leicester’s makeshift line-up in the early stages.
Salah had a golden opportunity to open the scoring in the 16th minute after his slalom through the Leicester defence was halted by Wilfred Ndidi’s trip.
But Salah failed to score a Liverpool penalty for only the third time as Schmeichel saved his unconvincing effort before the Egyptian headed the rebound against the bar.
Schmeichel made a host of fine saves to keep Liverpool at bay before Sadio Mane was guilty of a shocking miss when he sprinted through the heart of the Leicester defence, only to blaze over.
Klopp held his head in frustration and the German had even more reason to rue Liverpool’s profligacy in the 59th minute.
Three minutes after coming off the bench, former Everton forward Lookman took Kiernan Dewsbury-Hall’s pass, danced past Joel Matip and forced Van Dijk to back off as he planted a fine finish past Alisson Becker from 10 yards.
Elsewhere yesterday, Tottenham were held to a 1-1 draw at 10-man Southampton.
Southampton took a deserved lead in the 25th minute with a stunning strike from James Ward-Prowse.
The game was turned on its head when Mohammed Salisu brought down Son Heung-min in the penalty area shortly before half-time.
Salisu was sent off for a second yellow card and Harry Kane made no mistake from the spot.
In the second half, Kane saw a goal controversially disallowed by VAR for offside.
“Yeah, I think Harry scored twice, one a penalty and then the second goal. I think that I don’t want to comment on the referee decision or the VAR decision,” Spus manager Antonio Conte said.
Fifth placed West Ham won 4-1 at lowly Watford to bolster their top four bid, while Crystal Palace defeated bottom side Norwich 3-0 at Selhurst Park.