The revival of the season continued at New Grosvenor with the Whites yet again hitting three goals to move off the bottom of the table for the first time since the opening day of the season.
They got off to a super start, Glenn Ferguson striking in the fifth minute. Gary Thompson crossed and the goal-scoring legend fired home a low shot.
But Tommy Wright's side should have doubled their lead two minutes later. Neal Gawley broke clear and went one-on-one with City keeper Andy Coleman who made a vital save as did Whites keeper Phil Matthews when he turned a fierce free-kick from Matt Hazley round his post.
The home side then took their foot off the pedal and City had more possession but the closest they came to a first-half equaliser was on 22 minutes.
Defender David Munster crossed and Whites counterpart John Curran watched nervously as his touch sent the ball just the wrong side of Matthews’ post.
Thompson finished off in style following a one-two with Gary Browne on 51 minutes. He received the ball and cut in from the touch line before giving Coleman no chance from two yards out.
City though had chances in a 10 minute spell of pressure but keeper Matthews made three good saves.
He blocked a Rowe effort with his legs and substitute Andy Graham couldn't find a way past him on two occasions inside three minutes.
A minute from time Austin Friel banked the points when he met Ferguson's pinpoint cross to shoot home from eight yards out.
The win is a massive boost for the Whites’ hopes of survival and the defeat sees Newry City sucked into the relegation battle with Institute as well.
LISBURN DISTILLERY: Matthews, Callaghan, Curran, Muir, McShane, McCann, G Thompson (Melaugh 58), Kilmartin, Browne (Cooling 70), Gawley (Friel 81), Ferguson. Subs not used: McCluskey Corey.
NEWRY CITY: Coleman, O'Connor, Munster, McDonnell, Black, King (Keegan 86), Henderson (Boyd 80), Feeney (Graham 59), Hazley, Garrett, Rowe. Subs not used: Keenan, Devlin.
Referee: Alan Black (Antrim).