The amendment would have obliged the Charity Commission to take fees into account when assessing the public benefit provided by charities.
Phillips said: "It makes me think a number of schools have no intention of doing anything towards helping education as a whole."
Relying on existing case law, he added, was "asking for trouble".
He said the situation left him confused after the Independent Schools Council "went out of its way" to tell the joint scrutiny committee on the Bill how schools were making progress in demonstrating public benefit.
Phillips believes there will be "a strong reaction" over public benefit when the Bill moves to the House of Commons, yet the chance of changing the Government's formula remains bleak unless it and the Conservatives "change their tune".
The Government argues that the Charity Commission has powers to take fees into account, even without the Phillips amendment.
- See Policy and Politics, page 16.