It was also the first Premiership goal that Villa have scored in their Premiership games at St Andrew's and plunged Birmingham to their fourth home defeat of the season.
Villa have every reason to be pleased with their belated success as it lifts them four places in the table, while Birmingham now appear to be in serious trouble following their worst start to the season in many years.
The only plus point from the game for Birmingham was the return to action of David Dunn after a lengthy absence. He came on for the last 24 minutes and certainly created a good impression and indicated why he has been missed.
A big disappointment for City was their lack of striking power. Emile Heskey was generally off the pace and was kept under control by the highly mobile Olof Mellberg.
It was hardly surprising that in view of their indifferent record at St Andrew's, Villa made the more positive start. Phillips returned to the attack and partnered Luke Moore who was preferred to the club's record signing, Juan Pablo Angel.
This decision by O'Leary seemingly puts a question mark against Angel's future. He lost his place to Moore simply because he has not scored this season.
Despite Villa's early pressure, when Gareth Barry was often involved in the attacks, it was Birmingham who should have opened the scoring as early as the ninth minute.
After the industrious Steven Davis had lost possession, Jermaine Pennant took advantage of the situation to produce a perfect cross from the right. Heskey flicked on the ball to the lurking Julian Gray who lashed his cross-shot wide of the far upright.
Villa's determination, which was in sharp contrast to some of their low-key performances this season, continued to be a feature of the game and in the 19th minute they stormed ahead through Phillips.
Eirik Bakke, making his first start, slipped a pass to Barry who flicked the ball into the path of Phillips to notch only his second goal for Villa since his move from Southampton with an accurate left-foot shot.
Surprisingly the tempo slackened after the goal as if Villa were content to hang onto their slender advantage. In such circumstances they were dangerous tactics but Birmingham could not lift their game to take advantage of the situation.
City also suffered a setback when they lost Stephen Clemence with a leg injury just before the break. Manager Steve Bruce decided not to draft in Dunn at this stage, instead preferring former Chelsea man, Jiri Jarosik, to take over the crucial midfield role.
In an attempt to inject more pressure Bruce sent on Mikael Forssell for the generally ineffective Walter Pandiani for the second half.
But it was Jarosik who emerged as Birmingham's driving force as they subjected Villa to some early pressure which often left their local rivals more than a little bemused.
Only a timely intervention by Wilfred Bouma prevented a serious situation for Villa when he robbed Heskey as the big striker was about to shoot.
Angel and Patrik Berger replaced Phillips and Barry respectively but the most significant change was the introduction of Dunn for his first appearance since Boxing Day.
Within a minute of replacing Jamie Clapham only a late tackle by Aaron Hughes prevented a dramatic equaliser from Dunn.
The game should have been settled in the 70th minute when Davis put Angel clear only for the Colombian striker to lob the ball over the bar to highlight why he has been struggling to score this season.
As Birmingham applied non-stop pressure in the closing stages Dunn was unsuccessful with a penalty appeal after being floored which only summed up an indifferent team performance.