The Magpies led by one at the break, after a trailist opened the scoring from a Jonjo Shelvey pass in the eighth minute, before the game was put beyond Blues with three further goals conceded in the second-half at Whitley Park.
Newcastle captain Elliot Anderson struck in both the 63rd and 90th minutes, the second from the penalty spot, either side of an effort from substitute Dylan Stephenson.
However, the result was a harsh reflection given Blues' showing on Tyneside. The visitors hit post both before and after the interval, as well as seeing a goalbound shot cleared off the line.
And speaking after the Premier League Cup group stage encounter, Steve Spooner was not too disheartened despite the defeat.
He told BCFC.com: "The scoreline did not reflect the level of performance. We didn't deal with the first goal as we should have, but after 20 minutes into the first-half we settled down and probably for the remainder of that half and for the start of the second-half was probably the best period of play we have had all season.
"We continued probing and continued to threat. We produced some really good football but just couldn't put the ball into the back of the net. It was similar to the Reading game in terms of producing chances but just not finishing them off.
"It is Category 1 and we are being made to pay for those chances, as they could have given us real momentum because goals change games. When you are not putting teams to bed then they know that they still have the chance and that is the difference between us and the opposition this season.
Next up for Blues is a Second City derby in the Premier League Two and the Under-23s Head Coach is ready for what will be a high-octane fixture.
Spooner said: "We are absolutely looking forward to it. But we have to keep it in some context as well, where we are on our journey. Being on a Saturday afternoon and at St. Andrew's it will really make it feel like a first team game."
Newcastle United: Dan Langley, Joe Oliver (Charlie Wiggett), Matt Bondswell, Joe White, Brad Cross, Remi Savage, Jay Turner-Cooke, Jonjo Shelvey (Jack Young), Trialilst (Dylan Stephenson , Elliott Anderson (captain), Adamn Wilson.
Substitutes not used: Steven Bessent, Lucas de Bolle.
Blues: Oliver Basey, Marcel Oakley, Tommy Fogarty, Mitchell Roberts (captain), Callum Sullivan, Remi Walker (Rico Patterson), Alfie Chang, Oriel Soldevila, Kieran Wakefield (George Hall), Kyle Hurst, Keyendrah Simmonds.
Substitutes not used: Alfie Brooks, Rico Browne.