Porto's late equaliser in a 1-1 draw at Old Trafford stopped United reaching the quarter-final stage for the first time in eight years on Tuesday, dealing a devastating blow to United's season.
The champions face another highly motivated opponent on Sunday as Kevin Keegan's side aim to boost their relegation fight and pile the misery on their neighbours at the City of Manchester Stadium.
Should Arsenal defeat Blackburn Rovers on Saturday, a loss for United would cast them 12 points adrift of Arsene Wenger's league leaders -- with 10 games left to play.
Though many expected the title to be decided when United meet Arsenal at Highbury on March 28, City have a chance to administer an early fatal blow to their neighbours' hopes.
City have won just one of their last 17 league games and lost 4-2 to United in the FA Cup last month, but their players believe they can repeat last season's home derby win.
"We will not be taking anything for granted as far as United are concerned," their England goalkeeper David James told the club's website. "Even with good, bad or indifferent form prior to this game, they are still capable of being the best team in Europe on any given game.
"We do not go into the derby anticipating anything less than a tremendous performance from them, but I feel instinctively that this derby can be ours."
United head into the game with FA Cup wins over City and Fulham their only successes in the past seven games.
But defender Gary Neville, who was sent off in the Cup win over City and misses Sunday's match through suspension, says it is the perfect opportunity to pull United out of their slump.
"We are shell-shocked. But you have to take it on the chin and move on," he told the Manchester Evening News.
"We can't afford to feel sorry for ourselves...if one United fan thinks we will be feeling sorry for ourselves, they will come down on us like a ton of bricks and they will deserve to.
"We can't afford to go into that game with anything other than a positive attitude."
United produced one of their worst performances of last season at City's ground where they were convincingly beaten 3-1.
The players endured a dressing down from Ferguson before being allowed to leave the ground but used the defeat as the springboard for overhauling Arsenal, losing only twice more in their remaining 25 league games.
Ferguson needs to start a similarly inspired run this season, despite missing four defenders through injury and suspension -- Neville, Rio Ferdinand, Mikael Silvestre and Quinton Fortune.
But unlike last season United simply cannot afford the luxury of losing to City first.
