The 39-year-old striker joined the Eagles on loan in January after being deemed surplus to requirements at Blackpool.
The former England international announced last year that he intended to quit the professional game once his contract at Bloomfield Road expires in the summer.
He has, however, linked up with a side pushing hard for promotion to the Premier League and admits he is now considering prolonging a distinguished playing career.
Phillips, who turns 40 in July, told the Evening Standard: "Coming here at this particular time has given me a huge lease of life. Of course I have thought about it (playing next season).
"I have got the bit between my teeth again. Perhaps I faded a little bit at Blackpool but I have come here for a new challenge.
"Sometimes you need a change of scenery, a change of environment. That is nothing detrimental to Blackpool, they made it clear that they wanted me off the wage bill.
"Ex-players keep telling me to play as long as I can as my body will let me know, and that is what I will probably continue to do. But I won't make a decision on my career until late April."
On joining Ian Holloway's promotion-chasing Palace ranks, Phillips added: "I would like to think the manager brought me here for my experience but also for occasions like last Friday (against Watford), where I can come on, make an impact and score goals.
"I am experienced enough to know what I need to do and when to do it. I think you can see from the first two games that the manager can certainly rely on me.
"When I weighed up this situation, it made sense to link up with my old manager and a team that are challenging for promotion.
"I am going to get used and, at this stage of my career, I couldn't ask for any more. Hopefully we will get promoted and I may even get another chance in the Premier League."