Professional choreographer Phillips was dropped from Strictly Come Dancing earlier this year after bosses decided to replace her with Alesha Dixon.
Pallett told the Daily Record: "I think Dancing On Ice should snap her up. She's fantastic and a very talented lady."
Despite her endorsement, the ex-Emmerdale actress added that she doesn't believe Strictly chiefs were ageist when they opted to axe the 66-year-old.
She commented: "Who said axing Arlene was about her age? Aren't people just jumping the gun? Look at Cheryl Cole. She went on The X Factor and no one said anything about her replacing Sharon Osbourne.
"It's the same with Alesha. They both have experience on these shows. After all, Alesha won Strictly - she's done it. For shows to progress, you need to update them. You are always going to have changes. It's not about age, it's about evolving."
Pallett reportedly called for Jason Gardiner and Ruthie Henshall to be sacked from the Dancing On Ice panel earlier this year.