The striker's brilliant brace maintained the Foxes' three-point lead over Manchester City - ahead of their top-of-the-table showdown on Saturday
In front of watching England boss Roy Hodgson the 29-year-old netted a stunning 25-yard effort before firing in from close range to continue his stellar campaign.
Vardy is in talks with City to extend his deal and reached 18 Barclays Premier League goals for the season to underline his importance to Claudio Ranieri and help prove outstanding Leicester's title credentials
They were everything Liverpool were not, incisive, gritty, classy and determined as the Reds showed Jurgen Klopp how far they have to go.
Leicester were on top from the off and Riyad Mahrez curled wide inside two minutes and they came closer seven minutes later.
Vardy, who had already worried the messy Liverpool defence, scampered down the left and delivered the perfect cross for Shinji Okazaki, only for Simon Mignolet to turn his header onto the bar.
The hosts found it too easy to work space behind the visitors' backline as Vardy stretched Klopp's men.
Liverpool were angered when Robert Huth's stray elbow caught Adam Lallana in the face but it was symptomatic of the game, the Reds were rarely up for the fight
Mignolet saved Mahrez's speculative volley after 15 minutes as Leicester threatened with every attack.
Slowly, Liverpool regained some composure as Jordan Henderson and James Milner tried to assert some authority but they needed Mignolet to ensure they went into the break level when he turned Mahrez's brilliant 30-yard effort over
The Reds, in contrast to Leicester's feisty assaults, were powderpuff.
Roberto Firmino lacked the presence to worry Wes Morgan and Huth and Liverpool's aimless attacking efforts never troubled the hosts.
Alberto Moreno came closest when he woefully shot over five minutes before the break but the visitors had yet to find their radar.
Emre Can's deflected drive just after the restart showed improvement but Dejan Lovren continued to wilt against the pace and determination of Vardy.
And the England forward showed why he is so highly valued at the King Power Stadium on the hour
For all of the Foxes' neat play, it came from a route one ball from deep by Mahrez
Vardy was instantly on the move, leaving Lovren trailing, and he allowed the ball to drop over his shoulder before unleashing a first-time half-volley from 25 yards which screamed over Mignolet.
Worse was to follow for Liverpool 12 minutes later when Vardy doubled the lead.
The visitors' defence were sloppy to allow Okazaki to shoot and Lovren saw the striker's deflected effort run through to Vardy who did the rest.
In between, Leicester wanted a penalty after Okazaki seemed to be felled by Moreno but they did not need the extra help
In response to Vardy's opener Klopp threw on Christian Benteke but the striker increasingly looks like a £32.5million misfit
But for Leicester, Vardy was worth his weight in goals as they kept their title bid on track.
Source : PA
Source: PA