Instead, she called for a dramatic overhaul of laws that allow the detention and deportation of migrants who have been in the UK for years and which prevent them from working.
And she said: “My challenge – not just to the other leadership contenders, but to every Labour member – is to come together to create policies which both reflect our shared humanity and work in practice.
“That starts by saying immigration is great, and ends with a Labour government which enacts our values.”
Ms Phillips also sought to puncture the “pernicious myth” that Labour must “pander” to “working class-communities are hostile to immigration”.
This led to “political arm-wrestling between the left and the right over who can sound the toughest on immigration”, she said.
“Why, when we’re asked whether immigration is too high, do Labour politicians so often fumble their response? Let’s say what we think: No, it isn’t?”
The candidate – widely seen as the centrist outsider to succeed Jeremy Corbyn – condemned the immigration debate being “dominated by fear-mongering opportunists”
“In an attempt to sound tough, Labour has sometimes been too slow to stand up against this kind of rhetoric and, in the worst cases, even been seen to appease it.
“In a battle that’s become too much about ‘the numbers’, we’ve forgotten that, at its core, immigration is about people – people who fall in love, create families, build better lives for themselves and make our communities the vibrant places they are.”
Ms Phillips called for:
* No more deportations of child refugees when they turn 18.
* People to have the right to stay “who have lived in this country for many years without fear of being pursued by the Home Office”.
* The abolition of immigration detention not “just a time limit” on it – “we don’t need to lock people up”.
* Asylum-seekers to have the right to work – to prevent 15,000 people having to “seek help each year because of destitution”.