Villa held City at bay for over an hour at the Etihad Stadium, but were hit by a four-goal blitz from the hosts, who claimed a comfortable win to move two points ahead of Liverpool at the top of the Premier League table with one game left.
Lambert's men had already secured their Premier League status courtesy of a 3-1 success against Hull City last Saturday and the Scot was quick to credit his team's resolve against City.
"Until the first goal I thought we were excellent," Lambert said.
"The gameplan was working great, frustrating them and trying to hit them on the counter and we'd one or two little chances in the first half.
"You could sense the frustration in the crowd that they couldn't break us down.
"I couldn't fault the lads, I really couldn't, we have so many injuries.
"And you look at the two kids that came off the bench, one has just come back from Notts County (Jack Grealish), and the other (Callum Robinson) has just been playing Under-21 football, so it's a little bit of difference in the squads."
Barring a huge swing in goal difference, City will win the title with a draw with West Ham on Sunday.
But Lambert is not ruling out one last twist in the title race on the final day.
"I've seen some strange things happen on the last day," he added.
"They're (City) favourites to do it because they're at home and the players they've got, but you just never know."
