Phillips signed a new deal with the south Londoners after netting the match-winning penalty in the Championship play-off final.
But the 40-year-old has only made a handful of substitute appearances this season and will seek regular first-team football elsewhere after holding talks with manager Tony Pulis.
Phillips has hinted he will retire in the summer, but is confident he can still play an important role on the pitch for the next few months.
"I've had a chat with the manager and I will be leaving in January. I've been travelling for nearly two-and-a-half years and I want to find a club nearer home and I want to be playing football for the last three or four months of my career," he said.
"I've had a chat with the manager and he's fine with that. So yes, I'll be moving on. The goal at Wembley was the last one I scored and I want that feeling back. I will leave on great terms and while I'm still here I'll be giving everything if called upon.
"I haven't got another club lined up but I'm hoping I'll get something sorted out pretty quickly."