Phillips will remain at the Liberty Stadium until the end of the 2012-13 season. The news comes hot on the tails of the signings of Rhys Webb and Aaron Jarvis.
It is a major boost as the Ospreys look to secure their young talent following the departures of Gavin Henson, James Hook and Lee Byrne.
The 20-year-old signed his first Ospreys Academy contract in January 2007. He became the youngest ever player to start a Magners League match at 17 years and 250 days when he faced Connacht in May 2008. He also touched down in that encounter to become the youngest ever try-scoring, with both records still standing.
With the Ospreys boasting a wealth of talent in the wing department, Phillips has found opportunities rare and has only made one Magners League appearance this season. But he is seen as one of the most promising prospects and potent attackers in the Ospreys ranks.
"It's good news for Kristian and for the Ospreys that he's renewed," said Osprey head coach Sean Holley.
"He's a product of the region, and a prodigious youngster who has unfortunately suffered with injury during his short career so far, but he has put that behind him and fronted up to the challenge of developing himself as an Osprey.
"His attitude and his performances in both the Premiership and the LV= Cup this year have warranted a new two-year deal. He has real pace and a wicked sidestep, as well as an eye for the try-line, and he has a good scoring record for every team he has represented.
"He is continuing to develop his all-round game by working extremely hard. After some personal setbacks he is beginning to mature and we expect him to continue showing a positive attitude and continue to grow as a player over the next two years."
Phillips, a product of Tonmawr RFC, was equally delighted to pen a new deal with his home region.
"It's great news for me, I'm really pleased that I'm going to be able to continue my rugby development here for the next two years," said Phillips.
"It's a commitment from me to my home region, and it's good to see the commitment from the Ospreys coaches who are putting their faith in me to continue improving.
"It's been brilliant to get a run of games in the LV= Cup over the last few months. It's a chance for us youngsters to step up to the mark and I think we certainly did that as a group.
"It was unfortunate that we had 14 points but didn't go through, but like the rest of the group I'll be able to take confidence from that involvement and what we achieved.
"There's a few Magners games now where the bulk of the squad is away on international duties and it's up to us to put the team in a good position to approach the end of the season.
"It's my third full season in this set-up and things have been going really well for me. I've got another two years here and I'll still only be 22 by then, and hopefully, I'll be really pushing to get in that wingers jersey."
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