England caretaker manager Peter Taylor found himself outwitted by the wily Alan Smith last night. The Palace manager got his tactics spot on to chalk up a famous League Cup victory over the holders.

Leicester were defeated at the first time of asking with goals from Clinton Morrison, Steve Thomson and Andrejs Rubins settling this third-round tie.

The defeat was the first major setback of his Leicester career for coach Taylor, who will take charge of England against Italy next month. The 12,000 fans showed their displeasure at Leicester's performance by roundly jeering the team at the end of the match.

Taylor decided to rest skipper Matt Elliott and key duo Muzzy Izzet and Robbie Savage were also on the bench. With goalkeeper Tim Flowers suffering from a hamstring injury, Simon Royce made his first start of the season between the posts.

He had a night to forget with Palace opening the scoring in the 17th minute when Morrison scored from close range.

Palace flooded midfield and it was a tactic that worked when they adding a second in the 24th minute - a spectacular strike from Thompson.

Palace sewed things up in the 52nd minute when Rubins raced forward and unleashed a 30 yard thunderbolt.

Leicester: Royce, Sinclair, Davidson, Rowett, Gilchrist (Elliott 45), Lennon, McKinlay, Eadie (Izzet 45), Gunnlaugsson, Cresswell (Benjamin 45), Guppy. Subs Not Used: Price, R. Savage.

Crystal Palace: Kolinko, Smith, Austin, Mullins, Rodger, C. Morrison, Black, Thomson, Rubins, Carlisle, Harrison. Subs Not Used: Frampton, Gray, Evans, Gregg, Forssell. Booked: Black. Goals: C. Morrison 17, Thomson 23, Rubins 52. Attendance: 12,965.

Referee: R Pearson (Peterlee).