Wales suffered an agonising 9-8 semi-final defeat against Les Bleus, playing more than an hour of the game with 14 men after their captain Sam Warburton was sent off.
Flanker Warburton, one of the tournament's outstanding players, received a red card from Irish referee Alain Rolland following a dangerous tackle on France wing Vincent Clerc.
He became the first Wales player to be sent off in a Test match since 1995.
Wales had already lost prop Adam Jones through injury when Warburton was dismissed - and try-scorer Phillips vented his anger over an incident that undermined the contest.
Warburton will now face a disciplinary hearing, Wales must somehow lift themselves for the third place play-off match next Friday, while France can look forward to facing New Zealand or Australia in tomorrow week's final.
"I thought France were really poor, and I thought it was the wrong decision by the referee to send Sam off," said Phillips, who will join leading French club Bayonne after the tournament.
"It was the wrong decision completely. He is a young kid, he is the captain of his country, it is the semi-final of the World Cup.
"He is not a dirty player. He's a big hitter and that is what happens. It was a yellow card and that's it. It was just the wrong decision.
"Put things in context. It is not fair. It looked much worse than what it was.
"It was early on in the game, it is a massive game, you are flying into each other. You put big hits in and people go up in the air - that's the way it is.
"France played up on it. It was showmanship, and they did their job. It is just disappointing."
Phillips continued: "Sam is not a dangerous player. He has shown the world he is a great flanker and he is a player that deserves to be in a World Cup final.
"He is one of the best sevens in the world, and there are boys in our team who deserve to be in the final.
"France were poor and they are going to get blown away in the final. It is as simple as that.
"There was a lot against us but we still had the opportunities to have won, right until the end.
"We worked very hard but it wasn't our day. We had a real chance of reaching the final but it's difficult to say where we lost this match and the game with South Africa.
"We are a very good team and we deserve to be in the final, without a shadow of a doubt.
"We tried so hard to get to the final, and the French didn't do anything constructive on the pitch. All they did was look for penalties."
The neutral observers would have found it difficult not to sympathise with Phillips' verdict.
Wales dominated the game in terms of territory and possession, but they were left to rue four missed kicks at goal by three different players - James Hook, Stephen Jones and Leigh Halfpenny - although Jones' conversion attempt hit a post and Halfpenny's late long-range effort dipped inches under the crossbar.
Morgan Parra, in contrast, booted three penalties for France, and a third World Cup final appearance now beckons.
Rolland's decision to dismiss Warburton, though, was the only real talking point of a game that Wales' players and supporters will agonise over for many years.
"When you have two quality teams and someone goes down to 14 men, the other team at this level should win the game comfortably," Wales coach Warren Gatland said.
"I can't be more proud of the guys for what they achieved when we were down to 14 men after 17 minutes. It was courageous what they did.
"They pushed France so close and gave themselves a chance to win the game. I feel hollow. I feel our destiny was taken away from us in that 17th minute.
"Having looked at it, I think we accept Sam has lifted him and it probably warrants a yellow card under the directions the referees are sent about players being lifted.
"But he lets him go, he doesn't drive him into the ground and the player is fine to carry on. What surprises me is that the reaction of the referee is instant.
"I thought an experienced referee at that stage would have said 'hang on a minute, I'll bring my two touchies (assistant referees) in and say, what did you think, what did you think?'.
"They would have had a chance to look at the screen, see the replay and perhaps made a cool judgement. It just came out of the blue.
"If Paddy O'Brien (International Rugby Board referees' chief) comes out and says that it is a correct decision, I will back down.
"In a fantastic tournament there have been one or two matches where the referee has not been consistent enough. No disrespect to France or their players, they didn't make the decision and they are in the final.
"Sam is not that type of player - he is not malicious. He was against a very small winger, and he has gone into the tackle and he has lifted him - we accept that, but the tackle wasn't carried on.
"It wasn't driving the player into the ground. I can accept he lifted him, but I cannot see how that can be a red card situation."
Wales defence coach Shaun Edwards added: "It was a travesty for the competition because clearly the team who should be playing (in the final) next Sunday night is not going to be."
With Warburton off, Wales packed down at scrums with powerhouse centre Jamie Roberts in the back-row, but despite suffering huge upheaval regarding their tactics, they almost prevailed.
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