The forward is currently Albion’s longest serving player, having signed from QPR in the summer of 2016.
Phillips has made 172 appearances during five years at The Hawthorns.
And boss Valerien Ismael says the 30-year-old's versatility across midfield and the front three makes him a crucial asset, with Phillips having impressed as a central striker during pre-season.
“We have a front three - our ‘7’, ‘9’ and ‘11’ - and Matt can play all three positions,” Ismael said.
“We have some players in the squad who are able to play many positions, and Matt is one of those players.
“He showed us early in pre-season that even the ‘9’ position is a position for him, I believe.
“He is very intelligent in terms of reflecting well, and he comes all the time to us for more videos, more information and how to solve problems.
“It shows, simply, his professionalism. This is exactly what we need. The right player, with the right mentality and with quality.
“If you are 18 or 30 it doesn’t matter, as long as you have the right mentality, the right focus and the desire on the pitch. I think that Matt is the perfect example for our way.”