High Peak Liberal DemocratsThe MP for Sleaford and North Hykeham since 2010, he won the seat with a majority of more than 20,000 last year.
The MP backed EU exit but said he could not represent constituents due to disagreements with ministers about their approach since June's Leave vote.
It is not clear whether he will stand in a forthcoming by-election.
The politician and barrister is the second Tory MP to stand down in as many weeks - Zac Goldsmith last week forced a by-election over Heathrow expansion.
Mr Phillips, who despite backing an EU exit wants the UK to remain in the EU's single market, has been critical of the government's approach since June's Leave vote.
In a statement, he said: "It has become clear to me over the last few months that my growing and very significant policy differences with the current government mean that I am unable properly to represent the people who elected me.
"This decision has been a difficult one and I hope that everyone will respect the fact that I have tried to act in the best interests of all of my constituents."
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