Phillips made an instant impact when brought on as a second-half substitute and forced the spot-kick converted by Craig Gardner when challenged by Patrick Vieira. But Mancini felt the 37-year-old had gone to ground too easily as his team suffered another dent to their fading title hopes.
"It was a disappointing result for us and we can't keep conceding two goals every game," said Mancini. "It is impossible to win if you do that every time and the gap at the top at this moment is too much. But it isn't a penalty. It is nothing. It is impossible for that to be a penalty."
He dived: "He dived, the player (Phillips). I don't understand how the referee gave the penalty. When he loses the ball, he goes (down). That decision was costly for us. We didn't play well but it was not a penalty."
City twice led through Carlos Tevez and Aleksandar Kolarov but were pegged back by Nikola Zigic and Craig Gardner. They are now eight points behind leaders Manchester United and have played a game more.
To add to Mancini's woes, defender Micah Richards was taken to hospital suffering from concussion after colliding with his own player in midfielder Nigel De Jong. Dutch midfielder De Jong also suffered an ankle set-back on a night of frustration for the visitors.
"Micah is in hospital," said Mancini. "I haven't spoken to him and I don't know what's happened but it is concussion. He lost consciousness and he is in hospital."
But Birmingham manager Alex McLeish hit back at Mancini's verbal attack on Phillips and claimed it was a legitimate penalty.
McLeish said: "If you look at the penalties given against us this season, they've been much softer than that. I'm sure Manchester City have had their fair share of the dubious kind.
"Kevin has flicked the ball past Vieira and he has clattered in to him. That is a foul. Kevin was too quick for him. Vieira collided with him. Kevin never dived. Kevin is not a diver. He is a true English gentleman."