The 27-year-old defensive midfielder joined Manchester City on a big money move last summer from Leeds United, but failed to impress.
Phillips is down the pecking order at the Etihad and Manchester City are still trying to sign another midfielder in the shape of Matheus Nunes.
Liverpool are said to be interested in Phillips, as Jurgen Klopp is looking for midfield reinforcements before the end of the transfer window.
Phillips has not received any offers he would consider at present.
And he has been keen to stay at Manchester City and fight for a place in the team.
However, Manchester City still believe that Phillips could go before the window closes and would not have an issue with it.
Phillips may want to make sure he is playing on a regular basis ahead of Euro 2024 and could struggle to do that at Manchester City.
