Both sides went into the encounter in the bottom three having claimed just a solitary point from a possible 18 between them from their first three games respectively.
Speaking after Tuesday's Capital One Cup exit at League One neighbours Coventry, under-pressure Blues boss Lee Clark looked ahead to Saturday's match and insisted "it doesn't matter how we do it, we need to win".
And Blues' first-half winner came courtesy of a bizarre own goal from Robert Olejnik, with the Posh goalkeeper seeing his attempted punched clearance from Wade Elliott's free-kick go horribly wrong and end up in his own net.
Peter Lovenkrands, who initially celebrated the goal having been in the mix, was fuming just minutes later having been denied what appeared to be a blatant penalty.
But the shaky hosts held on in the second half as Peterborough failed to take their chances, meaning they have now lost their first four league matches for only the second time in their history.
Deadline-day loan signing Paul Caddis enjoyed a man-of-the-match debut for Blues at right-back, although there was no place in Peterborough's matchday 18 for new boy Kane Ferdinand.
Paul Taylor, who scored his second goal of the season in Tuesday's 3-2 Capital One Cup defeat at Reading, departed for Ipswich on Thursday but George Boyd lined up for Posh having rejected personal terms at Portman Road.
It was the visitors who briefly brought a quiet game to life when Michael Bostwick's 30-yard strike crashed off the underside of the crossbar after 15 minutes.
Blues were struggling for quality with their final ball but Elliott nodded down for fit-again full-back David Murphy to fire just wide.
And it was Elliott who played a part in City's 29th-minute opener to break up another spell of low-key action.
The midfielder's whipped free-kick was met by the fist of Olejnik but the ball spun backwards off the keeper's misguided punch and finished up in the net, with the challenging Lovenkrands celebrating.
Birmingham were denied a clear-cut penalty when Lovenkrands was sent crashing in the area, with Boyd almost scoring at the other end following a swift counter-attack.
Posh were proving a threat and Jack Butland saved well from Bostwick after a well-worked free-kick, before Lovenkrands fired over for Blues from a good position shortly before the interval.
Butland and Olejnik were called into routine saves at the start of the second half, with Caddis, enjoying an impressive bow, then firing narrowly over the bar.
Half-time substitute Lee Frecklington saw a shot deflected wide for the visitors before Butland and Murphy came together to deny Grant McCann, with the midfielder putting in another hard-working display having been taken off the transfer list on Thursday.
McCann fired over the bar in the 74th minute as Peterborough threatened an equaliser, with sub Tyrone Barnett then heading off target.
Marlon King, Nathan Redmond and Chris Burke wasted late chances for the home side, who held on to claim all three points.
