The 21-year-old, who made ten appearances from the bench at league level last term and is currently on a season-long loan at League Two side Walsall, has agreed terms until the summer of 2025. His existing deal was due to run out in June.
The former Everton academy player has impressed in the Midlands, scoring five times in 30 appearances.
Head of Football Operations Leigh Bromby commented: “We’re delighted to secure Kieran’s future to the club, as he’s another one of our young players that we feel has genuine potential to become a first team player for us.
“I think he showed his ability in flashes during his appearances for us last season and the first half of the current campaign at Walsall has been an important next step for him, as he’s shown he can handle the robustness of playing week in and week out.
“His challenge now is to keep improving for his loan club and to come back here and challenge for a place in our squad next season.”
Phillips's new deal follows on from the news that Rarmani Edmonds-Green - spending 2021-22 on loan at League One promotion-chasers Rotherham United - has agreed fresh terms.
It continues the joined-up thinking regarding securing the long-term futures of a number of the club's young players and looking after their short, medium and long-term development.
Already this month, Romoney Crichlow and Matty Daly have been recalled from loan spells to continue their development at Plymouth Argyle and Bradford City respectively, while young forward Kian Harratt has joined up with Port Vale on loan.
Midfield duo Josh Austerfield and Brahima Diarra have also linked up on loan with Harrogate Town.