The Hammers fought until the final whistle with a last-minute equaliser from Paola Di Canio but it was all to no avail as West Ham will in be the First Division next season after ten years in the top flight.
Acting manager Trevor Brooking proved inspirational, but West Ham's dismal early-season form proved to be their downfall.
Birmingham, meanwhile, completed their season unbeaten at home in their last six matches to enjoy the success of Premiership survival following promotion 12 months ago.
There was the expected early determination from West Ham as they strived to take the lead but the news of Bolton's goalscoring exploits against Middlesbrough put a damper on the Hammers hopes of survival.
Jermain Defoe was the first to pose a threat following an astute pass from Les Ferdinand but the little striker appeared surprised to find himself with only Ian Bennett to beat and hesitated to waste the golden opportunity.
Frederic Kanoute provided some silky skill, while Ferdinand was always a potential danger, but Birmingham's defence was in commanding form and they went on to close down the Hammers attack in a goalless first half.
Christophe Dugarry, who has been inspirational in Birmingham maintaining their Premiership status, had a couple of chances, but the Frenchman's header lacked power or direction and he failed miserably to convert Jeff Kenna's cross from the right.
Kenna later popped up to head a Defoe free-kick off the line as West Ham still battled to end their stay in the Premiership on a winning note.
But the closest either side came to breaking the first-half stalemate occurred in the final minute when David James was forced to produce an international quality save to keep out a powerful Geoff Horsfield header.
Early in the second half Ferdinand could hardly believe his luck when his close-range shot cannoned off Bennett and over the bar.
It was that kind of match for the Hammers as was demonstrated in the 65th minute when Trevor Sinclair's header was smashed against the crossbar by Birmingham's Matt Upson.
But two minutes later Ferdinand sent the Hammers' fans wild with delight when he obtained West Ham's well deserved goal when he headed home from close range following a left-wing cross from Joe Cole.
It put the game on a knife-edge but West Ham were out of luck in the 73rd minute when Kanoute smashed a first-time shot against the far post.
Birmingham's equaliser ten minutes from time summed up West Ham's dire fortunes. Horsfield was put in possession by substitute Bryan Hughes and the striker's shot was deflected high over James and into the roof of the net.
Substitute Stern John smashed Birmingham into the lead following a Robbie Savage cross, but the Hammers kept fighting to the end and Di Canio grabbed a late equaliser to cap a fine performance which came too late to prevent them from being relegated.