Phelan had been first team coach at Old Trafford and this position has now been handed to Rene Meulensteen.
"I am delighted that Mick and Rene have agreed to fill these important positions," Fergie told the club's official website
"Mick knows Manchester United inside out, having been associated with the club for the best part of 20 years. He is a very talented and professional coach, whose ability and contribution to the club's success has often been understated.
"Rene brings different ideas and experience to the role of first team coach.
"I believe he and Mick will provide an excellent team to continue the club's willingness to try new ideas and constantly drive for success in an increasingly competitive game."