The Evening News reports that Phelan has been offered the chance to prove himself worthy of the position of assistant manager.
Said Phelan: "My role hasn't changed, apart from the fact that I am now more directly involved in the coaching - myself and Carlos worked together last year.
"The manager has said he is not rushing into anything with regard to replacing Carlos. He has let me take pre-season, and it's been going pretty well.
"He has told me to get on with it and show my credentials, and the players have responded pretty well.
"I am a coach, and this is something I have always wanted to do. The manager brought me here as reserve team coach and things have progressed nicely. I have come a long way in two years, learning from the other coaches."