The Manchester rivals are facing a derby day title showdown next Monday after City pulled to within three points of United.
After Sir Alex Ferguson’s men were held to a thrilling 4-4 draw by Everton at Old Trafford, Roberto Mancini’s City took full advantage with a 2-0 victory to relegate Wolves at Molineux.
With a superior goal difference, City will go top of the Barclays Premier League if they win at home next Monday.
Asked if it will his biggest derby, Ferguson said: ‘Yes, definitely. Game on.’
Ten minutes from the end of the Old Trafford clash at Everton, it seemed United would be preparing for the ultimate act of revenge after that 6-1 mauling by the Blues in October.
But goals from Nikica Jelavic and Steven Pienaar secured a staggering 4-4 draw for Everton in the latest of a sequence of amazing results this season, which now mean United go to Manchester City knowing if they lose they will surrender the initiative completely.
'Yes, definitely,' said Ferguson, when asked if it was the most important derby he has known. We've given them the initiative, there is no doubt about that.
'It makes the game at the Etihad a really important game. A decider really. There has been an expectancy from City that it could be their decider, but it's our decider too.'
Twice in the second half United established two-goal leads after initially falling behind to Jelavic's opener.
Wayne Rooney scored two more goals to take his seasonal tally to 33, one adrift of his best tally, and 190 overall, fourth on United's all-time list.
When Danny Welbeck and Nani scored in the space of two minutes around the hour mark, it appeared victory was secure.
But Ferguson was stunned by the collapse of a team that had kept six clear sheets in its previous seven games.
'There were defensive lapses,' he said. 'Their goals were really soft. It was a real shock for us to defend like that. It was a travesty of a result in some ways but we made it difficult for ourselves and if you look at our history we keep doing that.
'We've thrown a game away that we should be coasting. But we didn't so we have given ourselves a difficult task.'
Everton manager David Moyes said he felt insulted his side's character should have been questioned, even though they twice found themselves two adrift just eight days after they were beaten by old rivals Liverpool in the FA Cup semi-final.
'I am really disappointed people would question their character,' said Moyes. 'It is a bit insulting because I would hate to think people either wouldn't understand me or the culture of Everton FC.
'At 4-2, did I think we were going to get back into it? I thought it would be very tough.
'But I felt we would definitely score one more goal, it was whether there would be enough time to get an equaliser.'
City manager Roberto Mancini played down his side's title chances and pointed to their three remaining games against United, Newcastle and QPR.
He said: 'We have another chance but United have a bigger chance than us at this moment (to win the title).
'We have three difficult games against United, Newcastle and QPR. Newcastle are fighting for the Champions League and QPR are fighting to avoid relegation.
'After the derby, United have two games which are not easy, but not difficult like us (against Swansea and Sunderland).
'Only one team can win this title. It's not in our hands. We have three points less.
'In any case, you all wrote the title race was finished. Seven days ago, the race was finished. You wrote it.
'Therefore I congratulate Sir Alex Ferguson on a good season.''
Of the performance at Molineux, Mancini was dissatisfied, saying: '(It was) so-so. I don't think it was a good performance like against Norwich and West Brom, our performance was not perfect.
'We needed to win this game, maybe we thought before the game it was easy but I told them before it was difficult. We had more chances to score - for this I am unhappy. I think in the end it was important to win this game.'
He also offered commiserations to Wolves, saying: 'I am sorry for them being relegated. They play very strong always, every game they have a strong mentality.'
Moyes conceded his side enjoyed a bit of luck when Patrice Evra's header came back off the post before the late drama.
However, the Toffees chief was making no apologies given he was already furious referee Mike Jones had not halted play in the build-up to United's second goal for treatment to Steven Pienaar.
'I was moaning at the referee because he made a decision for them and didn't equal it up for us,' he said. 'I couldn't understand it. It was a hard day from that point of view.'
Moyes was delighted with the final outcome though, which keeps Everton on track to finish the season above Liverpool, in addition to providing an unexpected twist in the title battle.
'We have reminded people that we are still here,' said Moyes. 'We are not a bad team. Since January we have been a very good team. When you lose a semi-final against your local rivals it is tough to take.
'The message was that we were going to go toe-to-toe with Manchester United. Only in the last minute were we hanging on a little bit.
'But how many teams are going to get back into it from a position like that at Manchester United? It will make next week's game at Manchester City a bit more tidy.'
By NEIL MOXLEY and CHRIS WHEELER
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