Phillips said Nandy was “deeply impressive” and will be getting her first preference vote in the contest.
Keir Starmer, the current frontrunner in the battle to succeed Jeremy Corbyn, will get Phillip’s second preference vote.
For a candidate to win on the first round they have to win over 50% of the votes of party members.
If no candidate reaches that threshold then second preference votes are reallocated until a winner emerges.
Phillips, who is seen to be on the right of the party and was a longtime critic of Corbyn, quit the contest after admitting she could not “unite” the party behind her.
She told Sky News today: “I think Lisa has been deeply impressive throughout the race.
“And I have found that not just on a personal level but I think the public view and the stuff that she has been doing have really made her stand out.
“So for me I would be happy if the Labour Party were led by Lisa Nandy or Keir Starmer.”
A spokesperson for Phillips confirmed the Birmingham Yardley MP would vote for Nandy in first place and Starmer in second.
“Jess will be backing the candidates who she thinks can bring the party together and win back the trust of the electorate,” the spokesperson said.
“She will be voting for Lisa and Keir. As she has said before, Lisa will be her first preference choice.”
Nandy’s campaign received a crucial boost this week after she secured the backing of the GMB union.
But according to the latest YouGov poll of party members she is still trailing Starmer and Rebecca Long-Bailey.
Long-Bailey, the favourite of the current party leadership, is expected to win the endorsement of the Unite union.
She has already been backed by the powerful Corbyn-supporting Momentum campaign group.Lab