When his contract with West Bromwich Albion expired at the end of the 2007–08 season, the club offered Phillips a one-year deal, with an additional second year if he made 19 or more league appearances. He rejected the offer, preferring to sign a two-year contract with Birmingham City, newly relegated from the Premier League. He made his debut on the opening day of the 2008–09 season against Sheffield United, coming on as a substitute to score a stoppage time winner in a 1–0 victory. Phillips continued his scoring run with goals in his next two games, against Southampton and Barnsley, "lashed in a stinging low drive" against Reading that earned him the club's Goal of the Season award, and finished the season with 14 goals in all competitions. His 14th, to take a two-goal lead in a 2–1 win against promotion rivals Reading on the last day of the season, ensured Birmingham's return to the Premier League after just one season in the Championship.