Liverpool travel to struggling Portsmouth on Saturday looking to make amends for Wednesday's heartbreaking 1-0 extra-time fourth round defeat at the hands of Merseyside rivals Everton.
Benitez says cup elimination leaves his side free to concentrate on wrestling the Premier League title from Manchester United's grasp.
"I don't think our confidence will take a blow by what happened on Wednesday," he said. "The players showed great character and when you lose in this way it won't affect the confidence of the team.
"It's very disappointing to be out of the cup but now we have to concentrate on the league and the Champions League so there is still a lot to play for.
"They are two massive competitions and we are in a very good position."
Liverpool's Goodison Park misery was compounded by Steven Gerard hobbling off with a hamstring tear after only 16 minutes.
The Reds skipper is out for a minimum of three weeks and will miss this weekend's trip to Fratton Park, which is particularly worrying for Liverpool because Fernando Torres is struggling with his match fitness after missing most of the early months of the season with his own hamstring problem.
"Torres was really tired on Wednesday and that is why I took him off," Benitez said. "Clearly he has to keep playing games and keep training because his match fitness is not at its best."
Benitez will receive little sympathy from Portsmouth counterpart Tony Adams, who is battling to save his job.
Last weekend's 3-1 defeat at Fulham left Adams with only two wins from 15 Premier League games in charge and he had to suffer the abuse of his own supporters for the first time in a career spanning 25 years.
Former Arsenal and England captain Adams said: "I received verbal abuse getting on the bus after the game on Saturday and that hurt.
"There were a couple of fans who were not happy over the way the team is playing and the results. They shouted they did not want me at the club again. To be honest it was put stronger than that.
"I tried to explain myself to them but they were not listening. I have had stick from opposing fans of course. I played a lot of games in my career and you don't expect to be liked by rival supporters but I have never experienced that before in my career.
"It was only a couple of guys angry at me but it did not stop me feeling bad about it.
"We had another bad result and I understand people's reaction but the club has changed and I am doing my utmost to scrap away and improve things."
With Gerrard sidelined, Dirk Kuyt could be in line for a more central attacking role after spending most of his time at Anfield playing wide on the right.
The Dutchman warned that his team-mates that they cannot afford to feel sorry for themselves in the wake of the cup defeat.
"Obviously we are all really disappointed to lose a game so late on because it did not look like they were going to score," Kuyt said. "That is football though and now we just have to keep going and look forward.
"The key now is how we react to this defeat. The positive thing from our point of view is that on the two other occasions we have lost games this season we managed to come back in the weeks that followed. That is what we must do now."
Source: http://sports.timesofindia.indiatimes.com/eplarticleshow/4087170.cms