Remi Allen gave Blues the lead with her third goal in as many matches against The Gunners, but goals from Kelly Smith and Freda Ayisi secured the visitors’ passage to the next round where they will face Chelsea.
The early 12pm kick-off time did not seem to help the hosts, who looked slightly lethargic after lengthy trips to Sweden and Yeovil in the past week and Arsenal started the game on the front foot.
Having been knocked out of the UEFA Women's Champions League by David Parker’s side, Arsenal were seeking revenge today and came out on the front foot, with Ayisi firing wide from 25 yards early on.
Blues grew in to the game and they took the lead on the half hour mark. After Smith allowed the ball to roll under her foot, Jade Moore stole the ball and pulled it back to Kirsty Linnett who put in a perfect cross for Allen to nod home from six yards out.
Arsenal looked to respond immediately, but Casey Stoney had a tame header saved by Rebecca Spencer before a controversial decision gave them the perfect opportunity to draw level.
Smith took aim from 25 yards and fired an effort on goal which was blocked by Moore. However, the referee gave a penalty, having concluded that the England international had used her arm to control the effort – despite it hitting her on the shoulder with both arms by her side.
Smith made no mistake from the spot, sending Spencer the wrong way – but she was grateful to the ‘keeper’s right-hand post, which the ball struck before crossing the line.
Having gone in to half-time on level terms, Blues came out for the second half and controlled the game. With five minutes of the second half gone, the hosts had a great chance to take the lead when Jo Potter played a quick free-kick down the line to Karen Carney who stood up a marvellous ball to the back post, however the onrushing Melissa Lawley volleyed the ball over Siobhan Chamberlain’s goal.
That miss began to look even more costly when Blues were hit with a sucker punch after 54 minutes. Danielle Carter played a perfect ball through the heart of the home defence to find Ayisi, who coolly slotted past Spencer to give Arsenal the lead for the first time.
Moments later, Linnett fired just wide from 25 yards after good play by captain Carney – but Arsenal looked dangerous on the counter attack.
A marauding run by Smith, which started 40 yards out and saw her skip past two challenges, ended with her firing wide and Stoney had another chance from a set-piece but nodded wide.
Nine minutes past the hour mark, Blues had a good chance to get level when Carney, who was having a growing influence on the game, got by her marker Emma Mitchell to put a cross in which found Allen in the centre of the goal – but the midfielder could not make firm contact for what would have been her second goal.
Lawley then had a penalty appeal turned down for the hosts before Linnett drilled a great ball across goal, but there was nobody in the area to touch it home.
Emily Westwood replaced Allen and Hannah Keryakoplis came on for a hobbling Lawley as Blues went all-out-attack in search of an equaliser.
Their best chance could have also come from the penalty spot when Carney once again skipped by Mitchell with the left-back leaving her leg dangling. Despite the trip, Carney kept her balance but the ball ran out of play - with appeals for a penalty falling on deaf ears.
With that incident, Blues’ hopes of another cup run came to an end and they now focus their attentions on a FA WSL Continental Cup fixture with Aston Villa on Tuesday 13 May.
BLUES XI: Spencer; Weston, Mannion, Harrop, Carter; Moore, Potter; Carney, Allen (Westwood 70), Lawley (Keryakoplis, 75); Linnett.
SUBS: Baggaley, Sergeant, Wilkinson.
GOALS: Allen, 30
BOOKED: Weston (66)
: Chamberlain, Scott, Mitchell, Kinga, Stoney, Ohno, Carter (Murray, 90), Smith, Williamson, Ayisi (Yankey, 71), Bailey (Weir, 89).
SUBS: Murray, Fahey, Sampson.
GOALS: Smith (pen), 39, Ayisi, 54.