All four goals came in the first-half of fixture.
Richard Beale's side got off to the worst possible start when they found themselves behind in less than a minute.
But parity was restored just ten minutes later when the ball was sent over the top for Corey O'Keeffe (pictured) who chested it down, before slotting it neatly past the goalkeeper.
Mid-way through the half Reading restored their one-goal advantage, before netting a third and decisive goal after 25 minutes.
Having found themselves with a mountain to climb Blues improved massively after the break and were unlucky not to find a way back into it.
Development squad Coach Richard Beale admitted that his side were made to pay for a poor 20-minute first-half spell.
"The first-half we were too open and allowed Reading too much space to play," he said.
"Instead of containing them as per the gameplan and blocking spaces and making it hard to play their game, we were a little bit between pressing and holding our shape and we paid the price.
"That was one part of it, but we were also beaten twice at the back post, which was disappointing."
Beale continued: "The second-half was much better.
"At half-time we told the players to reorganise themselves because they'd come away from the gameplan.
"They not only frustrated Readin but also created several chances.
"We hit the cross-bar and we had an opportunity at 3-1 whereby we've gone clean through and the ref has pulled us back for a free-kick against them.
"If we'd have scored that goal the momentum was with us and it would have led to a very interesting last 20 minutes.
"The big message from it is that the lads have been doing some really good stuff the last few weeks and working really hard.
"But today for 20 minutes in the first-half we came away from being as competitive as we have been , making tackles, putting pressure on people and that's the basics of it."
Blues Under-23s: Weaver, Dacres-Cogley, Caddis Seddon, 20), Cleary, Martin, Cooper, Maxwell, Lubala (Poppa,60), O’Keeffe, McDonald (Mbunga, 75), Hale.