The 28-year-old was banned "with immediate effect" on June 17 following allegations of an incident involving the scrum-half in Cardiff city centre.
However, Phillips met Wales Rugby Union bosses yesterday and apologised, leading to a statement from the WRU which confirmed he would be allowed to return to the squad and take part in World Cup training as of today.
The Bayonne player was not arrested and is not facing any criminal action in relation to the incident in Cardiff.
However, he said: "This is the most embarrassing thing that has happened to me in my career.
"I am ashamed to have let myself get into this kind of situation and I am determined to put things right.
"As a player I'm really passionate and never back down. I know I can't allow that part of my character to come to the surface off the rugby pitch.
"I have realised I have an issue with the way in which I deal with, and have dealt with, the pressures of my current environment and have sought, and will continue to seek, help and advice in relation to that issue.
"I have formally and sincerely apologised to my team-mates and the coaching staff in the Welsh squad and would like to take this opportunity to do exactly the same to the Welsh rugby public and anyone else who has been offended by this or other episode.
"I am a professional rugby player and I give the game my all, but there have been times I have let myself down as well as my family, the fans and my team-mates.
"The positive thing to come out of everything is that I now fully recognise that I need to deal with these pressures and I am taking every step to ensure that it is resolved.
"I deeply regret my behaviour, my exclusion from the squad took place in the glare of intense publicity and all I can hope for now is the privacy to concentrate totally on convincing the squad management I deserve to keep my place and the public's understanding and support for what I'm trying to do.
"I am a proud Welshman and I remain determined to devote myself to being the best rugby player I can possibly be to gain success for Wales in the World Cup and future tournaments."
Wales head coach Warren Gatland said: "Mike clearly breached the disciplinary code of conduct we have in place and was dealt with decisively and properly.
"We have taken into account all the relevant issues and Mike's apology in taking the decision to reinstate him in the extended RWC squad.
"An important factor in allowing Mike back into the squad was his decision to actively seek help to resolve his behavioural issues."
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