Shields announced on Sunday that Fenton had been relieved of his first-team management responsibilities.
Academy manager Wess Brown will take charge of the squad on an interim basis while the club undergoes the process of identifying and appointing Fetnton’s successor.
And that successor could turn out to be former Sunderland, Aston Villa, Crystal Palace and Southampton ace Phillips.
The Echo understands that the 48-year-old ex-England international is in advanced talks to replace Fenton with sources close to both parties confirming conversations have taken place.
The 48-year-old has expressed an interest in the vacant role at the Stadium of Light previously following the departure of Jack Ross in 2019 and of Phil Parkinson the following year.
However, an approach from Sunderland to Phillips was not forthcoming with the former European Golden Shoe winner deemed too inexperienced to take the reins at the Stadium of Light.
Should he take the role, South Shields would represent Phillips’ first job in management with the one-time Blackpool attacker having previously enjoyed coaching stints with Leicester City, Derby County and Stoke City.
Phillips has been out of coaching work since 2019 after a seven-month stint under then-Potters boss Gary Rowett.
The Hertfordshire-born ex-player is keen to take his first steps into management with The Mariners, who currently sit in third position in the Northern Premier League Premier Division.
It is also thought that Phillips could turn towards fellow ex-Sunderland player Gavin McCann to assist him at Mariners Park.
McCann – who was also capped internationally by England whilst a teammate of Phillips’ at the Stadium of Light – has enjoyed a mixture of non-playing roles between coaching and setting up The Milligan-McCann Academy aimed at eight to 12-year-old prospects.
In 1998, McCann moved to Sunderland from Everton, where he was a member of the side which won the Division One title and promotion to the Premiership with 105 points under Peter Reid the following year.
The former midfielder, 48, joined Aston Villa in 2003 and then had a stint with Bolton Wanderers between 2007 and 2010 before retiring.