A win would have ensured at least a sixth-placed finish for Blues, who were playing their 51st game of the campaign, and they were on their way as Chris Burke's sweet finish in first-half injury time put them ahead on Tuesday night.
But Ipswich had been the much better team and after Daryl Murphy missed a sitter in the first half and Jay Emmanuel-Thomas rattled the crossbar in the second, the former Arsenal striker finally gave his side some just desserts in the 75th minute with a close-range finish.
Blues must finish the job in their two remaining games and with three draws from their last three games, they are limping over the line.
Having registered one win in the last seven and with no chance of going up or down, Paul Jewell's men will be desperate for the summer to come.
Blues arrived at Portman Road having escaped with a draw from Saturday's encounter with Bristol City, having trailed 2-0, and boss Chris Hughton made two changes, with Morgaro Gomis and Wade Elliott coming into midfield.
The hosts made one change with Michael Chopra coming into the attack at the expense of Emmanuel-Thomas.
It was an uneventful and chanceless start but the home supporters finally had something to get excited about 10 minutes before the interval when Jason Scotland advanced through on goal, but his low shot was blocked by Colin Doyle and Murphy blazed the rebound over when a more cultured effort would have done.
Ipswich were building up a head of steam and went close again when Aaron Cresswell's low drive was spilled by Doyle, but the loose ball went to safety.
But then, with their first effort on goal in stoppage time, Blues took a lead their first half play had simply not warranted.
Andros Townsend found Burke just outside the area and he composed himself and found the bottom corner with a sweet strike from 20 yards for his 14th goal of the season.
Blues were boosted by their undeserved lead and they could have doubled it early in the second period, but Arran Lee-Barrett did well to deny Nikola Zigic.
Ipswich began to whip up a bit of a storm in response and they should have been level soon after as Cresswell's superb cross was headed over by Chopra before substitute Emmanuel-Thomas thundered an effort into the bar with a superb effort from distance.
Their reward eventually came with 15 minutes to go and Emmanuel-Thomas went one better by converting Carlos Edwards' cross from close range.
Birmingham could have snatched victory in the final 10 minutes but Lee-Barrett denied Marlon King and then Cresswell cleared off the line from Zigic as it ended all square.
