Phillips is seen being restrained by security staff outside a McDonalds at 3am in a series of images that have further damaged the reputation of the Welsh game following high-profile incidents involving Gavin Henson and Andy Powell.
In one photo Phillips' head is being held against the pavement by a bouncer, who is positioned on top of the prone 28-year-old Lions scrum-half.
When police arrive, Phillips is seen struggling as he is forcefully led from the scene in handcuffs.
A statement released by inspector Tony Bishop of South Wales Police read: "In the early hours of Tuesday, June 14 South Wales Police attended Queen Street, Cardiff, following information received that a man was being restrained by security staff.
"Officers attended and the individual was placed into a police vehicle while enquiries were made in the location to establish what had taken place.
"No complaints were received, no persons wished to provide statements and no offences were disclosed.
"The man was taken away from the area and no further action was taken."
The Welsh Rugby Union have reacted swiftly to what they view as a failure of disciplinary standards, suspending the player while further clarification over the incident is sought.
Phillips has been told not to report to the National Centre of Excellence on Monday for the start of his personal training regime ahead of the World Cup and will remain outside of the squad until further notice.
WRU group chief executive Roger Lewis said: "The player has been suspended due to a clear breach of the standards which we expect to be maintained by someone involved in one of our national squads.
"Discipline and acceptable behaviour are issues which run to the core values of the Welsh Rugby Union and we cannot tolerate any compromise of those standards.
"Mike Phillips is an exceptional player, but there is irrefutable evidence of a prima facie nature that he was engaged in behaviour which falls below the standards we set.
"It is vitally important that we send out a clear and unambiguous message to one and all concerning our views on matters of this sort.
"By taking decisive action now we are emphasising that this sort of incident is highly unusual in that the majority of people involved in Welsh rugby help us maintain the proud record we have for fair play and off the field courtesy.
"I am making my views public at this time because, as the nation anticipates our involvement in the World Cup there is no room for any ambiguity in our reasoning."
Phillips, who had sealed a move to French Top 14 club Bayonne from the Ospreys earlier this week, will now face questions over what took place.
The suspension is supported by Wales coach Warren Gatland, who has called up Cardiff Blues scrum half Lloyd Williams as a replacement.
The photos will be of considerable embarrassment to the WRU, who only recently have seen Henson and Powell run into disciplinary problems at their clubs.
Henson was suspended for one week in April by Toulon for fighting with two team-mates and one month later Powell was forced out of 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.
Lewis admits the conduct of the trio has tarnished the game but stresses they are isolated incidents that fail to reflect the overall professionalism of the squad.
"There are one or two exceptional things that have happened and one or two individuals who have brought a great besmirch to Welsh rugby," he told Sky Sports News.
"They are very much the exceptions - the majority of players do not behave like this. They are hard-working, dedicated professionals.
"We are now addressing this in a very serious and severe way.
"The action taken this morning - on discovering what took place and what was published in today's press - sends out a message that this sort of behaviour, not only do we not condone it but we condemn it.
"The players will be disappointed by Mike's actions but they will be hardened in their resolve to prove they are a dedicated group of players.
"The impact of this announcement will harden the resolve to do better than we have."
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