The former United midfielder served under Sir Alex Ferguson for a decade, before his retirement.
Ole Gunnar Solskjaer appointed Phelan after he was given the Man United job and the 56-year-old has proved pivotal in restoring the mindset lost at Old Trafford.
Solskjaer has already signed a three-year deal with the club to become their permanent manager and is desperate for Phelan.
However, it is understood that Mike Phelan is concerned by the club’s ‘convoluted’ management structure and feels there’s a muddled approach to their recruitment system.
Phelan is happy to be back at United, but it’s been over a week since Solskjaer signed his deal and the club are still trying to persuade him to sign his own.