HITC Sport understands Norwich midfielder Phillips is set for League Two loan.
Phillips joined Norwich last summer following a successful trial after being released by Liverpool following ten years at Anfield.
The 19-year-old saw his progress at Liverpool blighted by injuries, but he is over his injury problems and been playing regularly for Norwich's Under-23s this season.
Phillips has yet to make his first-team debut for Norwich, but the club have high hopes for the classy midfielder after tying him down to a two-year deal following his arrival in the summer.
With Phillips well down the pecking order in Daniel Farke's first-team plans Norwich are willing to loan him out so that he can valuable first-team experience and action under his belt.
A number of clubs are understood to have made enquiries for Phillips, but Cambridge have moved quickly to agree a deal with Norwich.
Cambridge boss Shaun Derry is looking to bolster his squad during this month's transfer window as he looks to maintain their push for promotion and he sees Phillips as a key addition to his plans at the Abbey Stadium.