Mario Lemina condemned troubled Liverpool to a remarkable sixth successive home defeat as Fulham earned a shock 1-0 win.
Jurgen Klopp's side are four points adrift of fourth-placed Chelsea, who can extend that lead to seven if they beat Everton on Monday that would leave Liverpool's hopes of Champions League football next season in severe doubt.
They could still make it by winning the European Cup, but glory in Europe's elite club competition is hard to envisage given Liverpool's steep decline.
In a sign of how far they have fallen, third-bottom Fulham thoroughly deserved their first win at Anfield in nine years.
Without an Anfield victory since before Christmas, Liverpool are a pale shadow of the team that romped to their first English title for 30 years last season.
They have been destabilised by horrific injury problems in defence, but it was still jarring to see the toothless Reds surrender so tamely once again.
“We never had a momentum in the season," said Klopp. "You can see it’s still in the boys. They still have it all but at the moment can’t show it. It would be a masterpiece to find out how we change that overnight.
"Conceding that goal before half-time was a massive blow. We tried to react and the boys showed that. In the end we don’t score goals and that’s a big problem."
The selection of Rhys Williams alongside Phillips meant injury-hit Liverpool were fielding their 19th different starting centre-back partnership in 28 league matches.
Unsurprisingly, Liverpool showed a lack of organisation and cohesion at the back, with Josh Maja sneaking behind the two inexperienced central defenders to scoop his volley over the bar.
Ademola Lookman got behind Neco Williams moments later, cutting into the Liverpool area before dragging his shot wide.
Fulham were causing Liverpool's makeshift defence all manner of problems and Maja was narrowly off-target from Lookman's pass.
Ivan Cavaleiro raced onto a long ball and beats Phillips, only to shoot over from a good position.
Diogo Jota made his first start since December after injury and Xherdan Shaqiri was up front as they replaced Sadio Mane and the injured Roberto Firmino.
Shaqiri curled a free-kick just over, but Liverpool were impotent in attack.
Bereft of confidence and growing more timid by the minute, Liverpool conceded in woeful fashion.
When Andrew Robertson could only head clear to the edge of the area, Mohamed Salah was easily brushed off the ball by Lemina, who drilled a fine finish into the far corner of Alisson Becker's goal.
Jota's stinging volley from Neco Williams' cross forced a fine Alphonse Areola save early in the second half.
Just after that chance, a plane flew over Anfield bearing the slogan "Unity is strength. Let's go Reds. YNWA".
Although Mane came off the bench to loop a header onto the woodwork and Shaqiri went with a curler, Liverpool rarely looked like response to that call to arms.
For Fulham, the momentum seems to be building in their battle against the drop. “I think we feel that," said Fulham midfielder Harrison Reed. "We have been building. We have grown massively since the start of the season and I think everyone at home and in the league can see that as well.
"The manager breathed belief into us. He talked about coming here and winning. Not getting a point. Coming here and winning. The first half was superb, one of our best performances of the season."
