The 24-year-old is now the fifth-choice centre-back at Anfield after Ibrahima Konate was brought into the club in the summer.
Phillips performed admirably for the Reds last season, when manager Jurgen Klopp had a centre-back crisis after losing Virgil van Dijk, Joel Matip and Joe Gomez to injury.
But the Liverpool boss will allow Phillips to go this month and, with West Ham United also said to be interested, Football Insider say a £12m bid could seal the deal.
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