Phillips grabbed his second goal of the season, pouncing amid a goalmouth scramble on the stroke of half-time, with Matt Taylor's side now four unbeaten in all competitions.
The Seagulls gave a good account of themselves at the Banks's Stadium and moved the ball around with quality.
Andrew Crofts' visitors, though, had permitted overage player Gary Dicker shown a straight red card for a wild lunge on Emmanuel Osadebe in the second half, and the Saddlers edged it with their nous.
While three without defeat in League Two, Walsall also sit at the top of Southern Group D in the Trophy.
Taylor had asked for the Saddlers to keep building momentum and while this competition is not for everyone these days, he got his wish.
The 1,200 fans also had a third consecutive home victory to cheer while several fringe players got some much-needed minutes. Things continue to move in the right direction after a solid night's work.
Walsall made seven changes from the side that beat Mansfield Town 3-1 in the league at the weekend.
Jack Rose made his first appearance of the season between the sticks, with Carl Rushworth unable to play against his parent club.
Skipper Joss Labadie – his three-match suspension only applying to League Two – returned in midfield.
Rollin Menayese, Zak Mills, Alfie Bates, Joe Willis and Osadebe were the others to come in. Youth team keeper Tommy Jackson was among the substitutes.
Brighton, meanwhile, had 16-year-old Evan Ferguson up front and 35-year-old Dicker in midfield – the latter with the Seagulls as a player-coach.
It was the youthful visitors who enjoyed the lion's share of possession early on.
The highly-rated Ferguson – well-built for his age – flashed an effort wide and forced Rose into action with another shot.
Jeremy Sarmiento, formerly of Portuguese side Benfica and an ex-target of both Manchester City and Bayern Munich, drilled another attempt just past the far post.
The Saddlers were spending most of their time chasing the ball while boss Taylor barked orders from the touchline, urging them to press higher and be more aggressive.
By the half-hour mark, though, Walsall had grown into it a bit more.
A well-worked move saw Hayden White surge down the right and send a cross into the box.
The ball fell to Osadebe, and he played it back to Labadie, whose powerful strike was palmed away by Tom McGill.
Labadie was helping to break up play and looking to set the tone with his work rate.
Another who was keen to chase down every loose ball was striker Phillips. He beat the unsure Haydon Roberts to an over-the-top pass but brushed the side netting with his first-time effort.
Slowly but surely, the Saddlers were gaining momentum as Brighton's zip faded.
The hosts went ahead just before the interval, too, as Phillips poked home after the Seagulls failed to deal with a free-kick into the area.
It may not have been the prettiest goal, but he did not care a jot.
Brighton were perhaps unlucky to be behind on the balance of play, and they started the second period with some vigour – winning a couple of corners.
For Walsall, left-back Mills began to have a greater influence. He did well to get past Sam Packham and pick out Osadebe, whose side-footed attempt from 20 yards was blocked.
Seagulls veteran Dicker then saw red for a reckless lunge on Osadebe.
Former Premier League referee Bobby Madley was in no doubt and also dished out a booking to Saddlers captain Labadie for his reaction.
Having the man advantage, the home side made their intentions clear with a double substitution.
George Miller – on the back of his impressive brace against the Stags – and Sam Perry replaced Willis and Bates in an attempt to kill the game off.
A second almost arrived soon afterwards as Phillips was released by Osadebe's clever reverse pass. Brighton shot-stopper McGill, though, rushed out and stood his ground.
The Saddlers were operating at a relatively comfortable level but needed a bit extra to carve the well-drilled youngsters open.
Jack Earing took the place of Tyrese Shade hoping to provide that spark. Ultimately, though, one goal was all they needed.
Walsall's next test in the competition is at Northampton on October 5, with a trip to Newport County coming up in the league on Saturday.
Walsall (4-2-3-1): Rose; White, Taylor, Menayese, Mills; Labadie (c), Bates (Perry, 61); Willis (Miller, 61), Osadebe, Shade (Earing, 82); Phillips
Subs not used: Jackson (gk), Monthe, Leak, Kinsella
Goal: Phillips (44)
Brighton U21s (4-3-3): McGill; Packham (Offiah, 84), Roberts, Turns, Furlong; Spong, Dicker, Leonard; Peupion (Tolaj, 80), Ferguson, Sarmiento (Moran, 68)
Subs not used: Desbois (gk), Hinchy, Miller, Nilsson
Red card: Dicker (59)
Attendance: 1,229 (33 Brighton fans)
Referee: Bobby Madley (Wakefield)