With three games to play, the best West Bromwich Albion can do is draw level on points, but they have a far inferior goal difference.
Defeat for Reading virtually ended their chance of a late run into the play-offs with four games to play, but for a side that was in the bottom three in January they have made a remarkable recovery since Brian McDermott was appointed manager.
It was Reading who had the better of the opening stages and for 20 minutes Newcastle were under pressure only to break away and take the lead.
Kevin Nolan got past Reading's makeshift centre back Brynjar Gunnarsson to shoot low across the face of goal and past the diving Adam Federici into the far corner of the net.
Minutes later, Newcastle nearly added a second but this time Wayne Routledge just failed to finish after latching onto a through ball from Danny Guthrie.
Shane Long raised Reading's spirits with a spectacular overhead kick but it flew straight into the arms of Newcastle keeper Steve Harper.
Three minutes before the break Newcastle went further ahead. Routledge burst down the right flank and sent a sharp cross in to the goalmouth where Nolan turned it in from close range.
Nolan came close to scoring a hat-trick with an effort that saw the ball strike a post and then spin across the goalline before being cleared by Gunnarsson.
Moments earlier, referee Fred Graham had angered Reading manager McDermott with an inexplicable decision.
With the ball several yards away, Shola Ameobi blatantly kicked Alex Pearce, knocking him to the ground.
Mr Graham awarded Reading a free-kick but did no more than give Ameobi a lecture.
Twenty minutes from time Reading pulled a goal back. Shane Long's effort struck the keeper and, as Jose Enrique tried to kick the ball clear, it hit Danny Simpson and rebounded into the Newcastle net.
Five minutes from the end Reading were reduced to 10 men when Gunnarsson was stretchered off unconscious following a clash of heads.