The climbdown means the savings will now be delayed or lost entirely, which puts pressure on Chancellor Rachel Reeves ahead of the autumn Budget.
Before its retreat on benefits, the Labour government was considering lifting the two-child benefit cap, a policy that restricts means-tested benefits to a maximum of two children per family for those born after April 2017.
When asked if the chances of getting rid of the cap had diminished, Phillipson said: "The decisions that have been taken in the last week do make decisions, future decisions harder.
"But all of that said, we will look at this collectively in terms of all of the ways that we can lift children out of poverty."