The hulking Welshman was a surprise omission from Saturday's Melbourne test, in which Australia squeaked home 16-15 to level up the series after the Lions, with Phillips at halfback, won the opener in Brisbane 23-21.
Backs coach Rob Howley told reporters before the match that the coaches had decided that, while available, Phillips had been rested because of a knee injury he sustained in the tour opener against the Barbarians in Hong Kong.
"When Rob Howley told me I hadn't been selected for the second test it was absolutely devastating news. My heart sank and I had a weird feeling in my stomach," Phillips told the Mail on Sunday newspaper.
"Rob said the coaches had taken the decision to rest me from Saturday's game because of my knee, but I'm a proud man and I still felt I could have done a job for the team."
Phillips, who started all three test on the last Lions tour to South Africa, had a brilliant match in Hong Kong which probably sealed his place in the team for the first test.
Unfortunately for a player whose physicality is a key part of his game, he also sustained the injury to his knee and he has been under management by the medical team ever since.
"It twisted and I felt something go and since then I've just been trying to get it to settle down." Phillips said.
"Initially it swelled up like a balloon on the flight from Hong Kong and I'm sure the medical guys thought, 'this isn't good', and that they would have to send me home.
"It was pretty scary at the start. I think everyone feared the worst but I was determined to stay on the tour and worked really hard to make sure I stayed part of it."
While Phillips admits he is not 100 hundred percent fit, he maintains he could still play a major role in helping the Lions to their first series triumph since 1997.
That remains a possibility after his replacement as starting scrumhalf, England's Ben Youngs, failed to grasp his opportunity, albeit while working with a gameplan that did not play to his strengths as a running halfback.
"I'm desperate to play next week, of course, but whether the coaches make that call is up to them," Phillips added.
"I don't want people feeling sorry for me or thinking that I'm making excuses. It is what it is. I played in the first test and we won so no one can take that away from me."