Premier League 2 struggles continued for the Foxes youngsters at LCFC Training Ground as Ryan Hedges' first-half strike confirmed a third-straight defeat for the side coached by Ben Petty.
Blackburn also sat in a precarious PL2 position prior to kick-off and sent a strong side to Seagrave, including several first team players.
It was two of those experienced heads who offered the first attempt of the game within the opening two minutes, as Hedges collected Callum Brittain's cross but saw his shot deflected into the arms of Brad Young, who returned between the sticks for City after spending the first half of the season on loan at Notts County.
Welsh midfielder Hedges did find the breakthrough for Blackburn shortly after that chance, however, sliding the ball into the far bottom corner from Harry Leonard's lay-off.
Bayli Spencer-Adams' block prevented Tayo Edun, another seasoned campaigner, from adding a quick-fire second, ahead of Jared Harlock's strike landing inches wide of the goalframe.
A long-range snap-shot from Khanya Leshabela was the best Leicester could muster in the opening quarter of an hour, meanwhile, with most of the play coming at the other end of the park.
But when Felix Goddard handled the ball outside the area, Wanya Marcal-Madivadua had the chance to float in a set piece that eventually fell for Tawanda Maswanhise, who found the stanchion behind the goal.
The away side showed more quality in the final third though - Wales youth international Jack Vale sent Leonard through and it took a last-ditch sliding tackle from Leicester skipper Lewis Brunt to deny him doubling the advantage. Vale went for goal himself moments later, hooking the ball over the crossbar, as Rovers continued to provide an attacking threat.
Deniche Hill almost created a moment of brilliance at the other end, slaloming his way into a shooting position after carrying the ball all the way from his own half, but could only hit the side netting, before Leshabela created space for another effort that failed to trouble Goddard.
A spell of Foxes pressure saw Maswanhise cut inside and curl an effort over the bar, while Kian Pennant was not far away when he struck wide on his left.
Coming off the left wing, Maswanhise then managed to cross from the byline, with Marcal-Madivadua heading over the top in the middle.
After seeing chances not taken, there could have been a sucker-punch at the end of the half, but for Spencer-Adams blocking Vale's shot in the box, with Hedges unable to hit the target from the rebound.
City started the second period on the front foot and Maswanhise led the charge. His creative spark, cutting inside from the left, fashioned a shooting opportunity only for Rovers centre-back Ashley Phillips to be well placed to divert it onto the roof of the net.
Mike Sheron's travelling side were keen to make it more comfortable for themselves as Hedges sent Brittain down the right and the full-back cut it across but there was no one there to finish.
A Blackburn counter-attack involving Hedges, Leonard and Vale soon led to the latter backheeling the ball to Harlock, who looked odds-on to score until Young produced a smart save to tip the ball away.
Goddard was kept busy at the other end too. After Brunt fired well over from a free-kick, Marcal-Madivadua forced the Rovers 'keeper into another stop, prior to Godsmark-Ford aiming wide from the edge of the box.
A flurry of Leicester opportunities followed. Brittain headed Spencer-Adams' effort off the line from Marcal-Madivadua's corner, and when Briggs mis-hit his shot, Maswanhise pounced on the loose ball, striking the bar from close range.
Once Brunt's header was saved from substitute Logan Briggs' corner, Briggs was denied himself trying to lift the ball over Goddard, and with it ended City's hopes of a point.
Major moment – The only goal
The only goal, a free-flowing move from the visitors finished off by Ryan Hedges inside the opening five minutes, ultimately settled the contest. Leicester gave it a good go but there was no way through in the end.
Who impressed? – Tawanda Maswanhise
Most of City's attacks came through Tawanda Maswanhise on the left and on another night he may have contributed with an assist or goal.
Where do we stand? – 14th in PL2
The defeat sees City remain 14th, bottom of the Premier League 2 Division 1 standings, while Blackburn Rovers move up to 12th and eight points ahead of Leicester with seven games to play.
Coming up – Manchester United (A)
The Foxes are back on the road on Monday, travelling to face Manchester United at Leigh Sports Village (7pm GMT kick-off).
The details...
City: Young; Wormleighton, Spencer-Adams, Brunt (C), Hill (Lindsay 68'); Godsmark-Ford (Briggs 80'), Leshabela; Marcal-Madivadua (T. Pennant 80'), Booth (Cover 50'), Maswanhise; K. Pennant.
Sub not used: Odunze.