Grant McCann's superb free-kick rescued a point for Peterborough that keeps them above Birmingham in the Championship table.
It was the least Posh deserved after Marlon King steered home David Murphy's cross to put City into the lead.
Chris Burke and King had chances to put the home side further ahead, but Darren Ferguson's men grew into the contest.
They got their reward when George Boyd was fouled on the edge of the box and McCann fired into the top corner.
Chris Hughton's men made all the early running, with Jean Beausejour and Murphy proving a threat down the flanks.
It was Murphy's cross that helped give the home side the lead in the 22nd minute when, after a rampaging run down the left, he picked out King for his fourth goal of the season.
As Blues tried to turn the screw, Burke headed wide Stephen Carr's cross and King fired in a shot which Paul Jones dealt with.
They were still on top in the early stages of the second half, but Peterborough grew in confidence as City spurned more opportunities.
They brought on Leicester loanee Tom Kennedy and Emile Sinclair to try and find an equaliser, and the attacking substitutions paid dividends when McCann stepped up to fire home his free-kick in the 61st minute - only the second goal Blues have conceded in the league at St Andrew's this season.
Both sides went looking for the winner and the home side nearly snatched it when Nikola Zigic raced through on goal, only to be stopped in his tracks by an offside flag.