Mr Phillips, 57, and Brazilian indigenous expert Bruno Pereira, 41, vanished from a remote part of the Amazon last week and are believed to have last been seen early on June 5 in the Sao Rafael community.
According to the Guardian, the family received a call from an aide to Brazil’s ambassador for the UK early on Monday saying their bodies had been discovered tied to trees in the rainforest.
However, Mr Phillips’ brother-in-law, Paul Sherwood, confirmed to the PA news agency on Tuesday that ambassador Fred Arruda had written to the family to say the statement was incorrect.
Mr Arruda said: “We are deeply sorry the embassy passed on to the family yesterday information that did not prove correct.”
He went on to say the embassy had been “misled” by information it had received from “investigating officials”.
Mr Arruda insisted: “The search operation will go on, with no efforts being spared.”
He added: “Our thoughts remain with Dom, Bruno, yourselves and the other members of both families.”
Brazilian Federal Police said the latest development in the search for the two men was the discovery of their personal items.
In a statement, they said the objects included a backpack and a pair of boots belonging to Mr Phillips, as well as a health card, black trousers, a black sandal and a pair of boots belonging to Mr Pereira.
On Saturday, separate reports emerged that police had discovered human matter in the Itaquai River, near Atalaia do Norte’s port.
Authorities previously said blood found on a suspect’s boat had been sent for analysis.
Amarildo da Costa de Oliveira, 41, also known as Pelado, was earlier named as a suspect and arrested for allegedly carrying a firearm without a permit, a common practice in the region.
Police did not clarify why he was being treated as a suspect but he is thought to have been among a group of men who threatened the missing men near an indigenous territory on June 4.
A GoFundMe set up by friends of the men passed hit 36,704 dollars on Tuesday evening.