The 24-year-old has been in impressive form for Dean Smith's side during the 2019-20 campaign, scoring nine times and registering eight assists in 31 appearances in all competitions.
Manchester United continue to be strongly linked with the Englishman, but Phillips has tipped Liverpool to attempt to sign the attacking midfielder ahead of next season.
"Liverpool are at a point where they can splash out on the world's best. Those world's best players want to come and play for Liverpool and Klopp. He plays a certain style and he will not buy someone unless it plays his system," Phillips told Football Insider.
"The obvious one is Jack Grealish. If Villa go down I am certain he will move on. Could he play for Liverpool? He is the only one out of the bottom three or four teams that could fit in that team. They will certainly be targeting players from top abroad teams and around the world."
Grealish, who has seven goals and six assists in the Premier League this season, will see his current deal at Villa Park expire in the summer of 2023.