The 35-year-old celebrated signing a new one-year contract last week by helping United into the quarter-finals of the FA Cup with a 4-1 win at Derby on Sunday.
The Welshman had a part to play in three of the Red Devils' goals at Pride Park, coming a week after sealing all three points at West Ham with a fine virtuoso strike.
United can go five points clear at the top of the Premier League with a win at home to Fulham on Wednesday, a game Giggs is likely to be rested for, but Phelan insists the veteran just gets better with age.
"There is an argument to say Ryan is playing better than he has ever done," he said.
"He looks after himself, is totally professional and seems to have found a rich vein of form.
"He goes on to another level every year. We can only be happy with that."
The man himself is too modest to declare that he is in the form of his life but he does admit that he is enjoying his football more than ever before.
Enjoyment"I am certainly enjoying my football more than ever," he revealed.
"It is for other people to judge whether I am playing as well as I have ever done. But I am playing quite regularly and the team are playing well, which is what we want."
Giggs acknowledges that a move infield from his natural position of left-wing has enabled him to continue playing at the highest level and prolonged his career.
"I am not going to sprint in behind defenders like I used to but I use my experience to get on the ball and try to create from there," he added.
"You know without even looking sometimes that a colleague will be there because the movement is so good.
"I was really pleased to sign for another year and look forward to being a part of this team."
United are currently fighting on five fronts this term with Giggs looking to add to his bulging trophy cabinet of 10 Premier League titles, four FA Cups, two UEFA Champions Leagues and two League Cups.
"We don't think of ourselves as invincible but we are in good form and on a great run," he highlighted.
"Every player that comes in needs to take their chance. You are finding that lads coming in are fresh and we are playing some good stuff."