The scrum-half, who recently sealed a move from the Ospreys to French club Bayonne, was dropped from the squad on June 17 after being involved in an incident outside a McDonalds at 3am in Cardiff city centre.
Images showed the 28-year-old being restrained by security staff, and the Welsh Rugby Union reacted rapidly by announcing Phillips' suspension.
But Phillips met with WRU bosses on Monday and was re-instated in coach Warren Gatland's 45-man panel and has since returned to training ahead of two World Cup preparation camps in Spala, Poland next month.
And Scarlets hooker Rees believes Phillips will use the events of the past two weeks as a motivation ahead of Wales' World Cup campaign.
Speaking at the launch of Wales' Under Armour kit for the global showpiece in New Zealand, Rees told Press Association Sport: "We all know how great a player Mike is and it was unfortunate for him to get caught up in what happened, but it is great to have him back in the squad and I am sure he will feel he has a big point to prove to everyone.
"Everyone is working very hard to prepare for the World Cup, Mike is no different and I have no doubt he will be fully focused with guys like Dwayne (Peel), Tavis (Knoyle) and Richie (Rees) competing for his jersey."
The incident involving Phillips came not long after fellow Wales squad members Gavin Henson and Andy Powell had faced disciplinary problems of their own.
Henson was suspended for one week in April by Toulon for fighting with two team-mates and one month later Powell left Wasps in the wake of a fracas with football fans in a London pub.
Powell was also suspended by Wales in February 2010 after driving a golf buggy up the hard shoulder of the M4 motorway whilst over the legal alcohol limit following the Six Nations win over Scotland.
Rees admits such incidents are a distraction, but has called on all players in the national squad to focus all their energies on New Zealand, where Wales have been drawn in a tough group including world champions South Africa, 2007 conquerors Fiji, Samoa and Namibia.
"It is a distraction but the main thing now is the World Cup," he said.
"That is what we have to focus on and work towards. It has been made clear to us that we are professionals and we know there are sacrifices we have to make.
"These things can be frustrating sometimes but the boys have been spoken to and we are all focusing on the World Cup."
Following next month's training camps in Poland, Wales will face England (twice) and Argentina in August in their final Tests before their World Cup campaign gets under way against South Africa in Wellington on September 11.
And former Pontypridd forward Rees says the three August fixtures are hugely important if Wales are to hit the ground running in the land of the long white cloud.
"The three warm-up Tests will be massive," said the 30-year-old.
"Going into a World Cup you need to have belief and continuity. Our opening game of the World Cup is against South Africa and we know that we will need to be playing good rugby right from the off.
"There are no second chances when it comes to a World Cup and we want to perform well in August to give us that boost in confidence and belief.
"Our minimum requirement at the World Cup is a quarter-final place after being knocked out in the pool stages four years ago.
"We let Wales down then and we have to put that right.
"We as players have all learnt from what happened and we are in a much better place now in terms of conditioning and skills and I am sure the experiences we have had over the last four years will stand us in good stead."
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