LIVERPOOL: Tim Cahill has played down fears Everton could become embroiled in a relegation scrap, despite the club languishing just three points above the drop zone with over a third of the season gone.

Sunday's 2-0 home defeat by Liverpool in the Merseyside derby has increased concern among the Everton faithful, but Australia midfielder Cahill felt the display was encouraging.

Everton dominated for significant periods of the match and Cahill said: "I think that's the best we've played in a while.

"Our passing was good, we made lots of space with our movement and had two disallowed goals.

"We were strong from corners too. It's hard to take but at this stage it's not going to get any easier.

"We're in a lot of trouble - the only way we can get out of it is by playing and working our way out of it. We're too good to be in this position."

Everton have won only once in 11 matches in all competitions and have scored only nine goals in that run.

Cahill added that he and his team-mates had to get the derby defeat out of their systems as soon as possible.

"It's just one of those things and nothing's going to fix it except our mental attitude as individuals and a team," he added.

"I'm a lot more positive though - we played better football and had a much better attitude.

"We couldn't hit a barn door at the minute but I'm much happier with our approach.

"It's the overall attitude and mental toughness that counts."