Phillips, who played in all three Tests on the Lions' recent tour of South Africa, suffered ligament damage in the Ospreys' narrow win over Clermont Auvergne and will be out of action for at least 10-12 weeks.
"Mike had a scan yesterday, which was then reviewed with the specialist, who confirmed ligament damage to the distal tib/fib joint," said Ospreys physio Chris Towers.
"Mike will now be subjected to further specialist tests and investigations towards the end of the week once the pain and swelling has subsided sufficiently to allow it.
"This will put us in a better position to confirm the best course of treatment going forward, but it is fair to say that Mike has suffered considerable ligament damage, and the best-case scenario would probably see him sidelined in the region of 10 to 12 weeks."
Phillips is therefore unlikely to play again in 2009 and will miss his country's November Tests against New Zealand, Samoa, Argentina and Australia, as well as his region's European double header against Viadana in December.
There was further bad news for the Ospreys after they revealed that second-choice scrum-half Jamie Nutbrown will also be unavailable for two-and-a-half months as a result of a similarly serious knee injury.
"Jamie also left the field on Sunday after suffering a knee injury," added Towers.
"His MRI scan has confirmed an injury to the posterior cruciate ligament, coupled with damage to the medial collateral ligament. Subsequently, he faces a period on the sidelines, that at the moment, we are predicting could keep him out for somewhere in the region of 10 weeks also."
The double setback leaves the Ospreys short of No9s, meaning Lions wing Shane Williams could be forced into emergency cover in the position in which he began his career.