Valley were left to rue a number of missed key chances as Lye Town took the points at Butlin Road.
The visitors kept alive their play-off hopes with a goal early in each half, while Rugby's latest home defeat kept them at the foot of the table.
Valley boss Carl Adams recalled Mikey Taylor to the starting line-up after the striker had been unavailable for the defeat at Hinckley, with new signing Ayo Lekuti replacing Jamie Melbourne at left-back.
Taylor could easily have given Town the lead within twenty seconds after David Kolodynski's excellent pass had released him in behind, but his close-range attempt was smothered away by Lye keeper Ben Newey.
Paul Ibhadon's low strike at the other end was comfortably gathered by Tomasz Bukowski, before the visitors took the lead when Star Mayemba expertly headed Ben Billingham's corner down past Bukowski and in off the post.
Lye were soon pushing for a second, with Joe Palmer almost capitalising on a long through ball, but he was denied by the advancing Bukowski.
The visitors' decent spell continued, with Bukowski punching away a dangerous Billingham free-kick and then Josh Thomas blocking a shot by Nathan Kabeya.
Barry Fitzharris had earlier sent one over the bar from 25 yards after another effective contribution in the build-up by Kolodynski, before Rugby regained the initiative and ended the half on top.
Within this period of play, both Kolodynski and Taylor saw their shots blocked away, Theo Rowe also struck one at a Lye defender after he cut in from the left and the debuting Lekuti sent one over the bar from distance.
Valley's best opportunity of the half came just ahead of the interval, when Taylor was released by Madundo Semahimbo's clipped ball, but the striker could only help the ball just wide of the post.
Valley's deficit was doubled four minutes into the new half though, when Palmer coolly stroked home Kabeya's cross to round off a well-worked move.
It was pretty much all the home side from then on in terms of possession and territory, but they failed to fully test the one-time Rugby keeper Newey to any great extent.
Chris Clements's free-kick from the edge of the box was blocked away, and from the recycled ball Taylor's effort also found a Lye body.
Kolodynski curled one into the side-netting, before he had a goal ruled out for offside, with Taylor then almost in again - but unfortunately his first touch let him down.
Sub Silvano Obeng's looped header to a Rowe cross drifted harmlessly off-target, and another chance fell to Taylor, but he slipped as he went to shoot and the resulting connection was not a true one as a result.
The final chance of the game saw Kolodynski fire in a volley on the turn, but a deflection on the way ensured it was an easy take for Newey.
