The Whites travelled to the King Power with a youthful looking development squad due to first team commitments for the likes of academy regulars Joe Gelhardt, Sam Greenwood and captain Charlie Cresswell.
Leeds, though, put in a strong performance in the Midlands despite losing out thanks to a second half goal from Foxes forward Tawanda Maswanhise.
United spurned a number of opportunities throughout the encounter with hosts goalkeeper Brad Young forced into action, particularly in the first half.
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After Jackson's side fell behind against the run of play they again pressed City back though failed to break down their Premier League 2 counterparts to much frustration.
As the clock ticked down United were denied what appeared to be a penalty at first glance in added time after midfielder Lewis Bate was sent tumbling to the floor by Kasey McAteer following a clever dribble.
Replays suggested the Whites had a strong case though referee David Richardson felt otherwise and waved away the protests, which sealed defeat for Leeds.
"We just weren't clinical in the final third," Jackson told the YEP post-match.
"I thought we were a bit too open at times as well for a period of the first half. It was kind of us attack, they attack. I challenged the boys to be better in the second half at that.
"We did create the chances. We weren't clinical in the first half and it came back to bite us. They got the goal then had a game plan to sit in and frustrate us, which they did. We tried to break them down but we just didn't have that cutting edge in the final third and that little bit of quality to break through their defence.
"The higher you go in football, the more you'll get punished. You have to take your chances. The pleasing aspect was our attacking play created that amount of chances but we have to be better at finishing them.
"I think we finished the game today with four Under-18s on the pitch and an Under-16, so it goes to show the strength we have. There's certain elements we can be pleased with but there's other areas where we need to improve."
Asked about the late penalty shout for his side, Jackson said: "I saw it and it didn't spring to mind as a clear one - but Lewis was adamant after the game.
"I haven't seen it back yet. I've only known Lewis for a short period of time and he's a really honest young man and he said it was a penalty. We'll have a look back at it.
"We can't dwell on it because it didn't get given. At the end of the day you have to get on with it. The boys kept pushing and they were getting into positions like that in stoppage time, so that was good.
"On a different day it might've been a penalty but it didn't happen tonight."