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According to The Sun, the show's producers have axed the 66-year-old choreographer and are hoping to replace her on the judging panel with popstar Alesha Dixon, 30.
The report claimed that the BBC wants to attract a younger audience demographic and hopes that the new judge will appeal to viewers of ITV1's X Factor.
Commenting on the speculation, a BBC spokesperson said: "We can't confirm anything about the new series of Strictly yet, but we are always looking at ways to maximise viewers' enjoyment of our shows."
Meanwhile, Dixon told Sky News: "There is always speculation. Two months ago they were reporting that I was going to take over from [host] Bruce [Forsyth].
"But once you are part of Strictly Come Dancing, you are part of the family and I do feel that about the show. It it wasn't for Strictly, I wouldn't be here because it really has changed my life."
However, Dixon has scheduled tour dates promoting her The Alesha Show album in October and November, which casts doubt on her ability to take the post.
Judges Craig Revel Horwood, Bruno Tonioli and Len Goodman are all expected to return for the new series of Strictly in the autumn.
Phillips, who found fame working with 1970s dance troupe Hot Gossip, has worked on other TV projects including Dance X and Britannia High.
