Ronald Koeman did his old side Barcelona a favour by leading Valencia to an impressive win at the El Santiago Bernabeu.
David Villa gave Valencia the lead on 33 minutes with a cool finish, but the advantage proved short-lived with Raul drawing Real level just two minutes later.
Real skipper Raul turned the game on its head with his second on 56 minutes, but Valencia refused to lie down and hit back through Villa's penalty on 67 minutes after Fabio Cannavaro fouled David Silva in the box.
Valencia stunned the home fans a minute from time when Angel Arizmendi skipped past Cannavaro down the right and beat Iker Casillas at his near post to give Valencia the points.
Barcelona are now just four points behind Real after Bojan Krkic inspired them to a comfortable 4-1 success over Real Valladolid at Camp Nou.
Samuel Eto'o opened the scoring for the home side on 24 minutes when he volleyed home from close-range, but Valladolid drew level six minutes later with Jonathan Sesma converting from the penalty spot.
Barca restored their lead two minutes after the break, with Andres Iniesta finding the net.
Bojan added a third on 62 minutes when he scored from an acute angle and he grabbed his second of the contest six minutes from time after the goal was put on a plate for him by Eto'o.
Villarreal remain in third, spot two points behind Barcelona, after a 2-1 win at basement boys Levante.
Matias Fernandez fired Villarreal in front 27 minutes only for Miguel Angel to hit back for Levante on 64 minutes.
Guillermo Franco popped up with the winner for Villarreal seven minutes from time, to keep them on course for a place in next season's UEFA Champions League.
Real Murcia celebrated their first win under Javier Clemente with a thumping 4-0 victory over Espanyol.
Ivan Alonso broke the deadlock on 36 minutes and he grabbed a second straight after the restart to put Murcia in control.
Further goals from Abel (63) and Richi (84) put the game beyond a shell shocked Espanyol.
Racing Santander moved above Espanyol into sixth spot with a 2-0 win over struggling Recreativo Huelva.
Recreativo faced an uphill battle after Martin Caceres was sent off on 64 minutes and Racing made them pay with two late goals from Sergio Orteman (81) and Ebi Smolarek (90).
Real Betis eased their relegation worries with a crucial 1-0 win at Osasuna.
Former Liverpool man Mark Gonzalez scored the only goal of the game on 52 minutes, with Javi Garcia seeing red for Osasuna in the final minute.
Real Zaragoza remain in trouble after being held to a 1-1 draw at home to Almeria.
Zaragoza suffered a blow on the hour mark when Gabi was sent off, but they still took the lead on 68 minutes courtesy of Ricardo Oliveira's goal.
It looked like being enough for Zaragoza until Alvaro Negredo grabbed a last-minute leveller for Almeria.
Athletic Bilbao climbed further clear of trouble at the wrong end of the table with a narrow 1-0 win over Getafe.
Veteran winger Joseba Etxeberria proved to be the hero for Bilbao with the only goal of the game just before the half hour mark when he turned in Asier del Horno's cross.
The win inflicted Getafe's first defeat in seven games and sees Bilbao leapfrog them in the table on goal difference.
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