Nancy Eleanor Creagh was born in Sydney, New South Wales, and had "a magical childhood, spent wandering the shores of Sydney Harbour near Chinamans Beach and The Spit on Middle Harbour with her friends and extended family". She studied at the Conservatorium of Music and the University of Sydney. However, as a teenager she saw the limitations of her suburban life and was keen to travel, so in 1938 she bought a one-way ticket to England. She met her husband, Raymond "Pete" Phelan, in London near the beginning of the war, and had her daughter, Vanessa, there. She and her daughter were evacuated to Devon where she spent her war years while her husband was in the Navy.

She returned to Australia with her family in 1945 and quickly joined the thriving arts scene of Potts Point, Kings Cross and Elizabeth Bay. In 1946 she obtained work as a visual aids officer with the South Pacific Commission, and travelled frequently to the South Pacific islands. In 1951, she became assistant organiser for Island literature in the Commission's Social Development Section, but she resigned in 1956 to write full-time. Her first book, Atoll Holiday, published in 1958, was inspired by her three months in Gilbert Islands. Her writings of her travelling alone in places such as Turkey and post-war Japan "shocked her readership".

In addition to writing books, she also wrote short stories and articles, and was a reviewer for The Sydney Morning Herald from 1970 and the Melbourne Age from 1972.

Phelan was the niece of Amy (1876—1939) and Louise Mack (1870—1935), a Hobart-born writer who became the first female war correspondent during World War I, and the cousin of Australian conductor, Charles Mackerras. She wrote biographies of both. Her friends included writers Patrick White, Kylie Tennant, Dorothy Hewett, Jessica Anderson, Nancy Keesing, Elizabeth Harrower and Peter Porter, and the artist Jeffrey Smart.

The Patrick White Award judges said that she wrote with "delicious verve and humour" and that her "passion for life has led her to explore other cultures and to write memorably about them whether in fiction or non-fiction".

Towards the end of her life, Phelan said that she wanted to push her prose towards poetry: "Poetry gets to the crux of things in a beautiful and arresting way ... That's the sort of writing I would like to be able to do. I don't know that I will ever get there. It's a very difficult job, writing, isn't it?"

Novels

• Home is the Sailor; and The Best of Intentions (1987) (ISBN 0-947062-15-7)
• The River and the Brook (1962)
• Serpents in Paradise (1967)
• The Voice Beyond the Trees (1985) (ISBN 0-908090-83-8)

Autobiographies/memoirs

• A Kingdom by the Sea (1969)
• Setting Out on the Voyage: The World of an Incorrigible Adventurer (contains A Kingdom by the Sea and Hearts of Oak) (1998) (ISBN 0-702-22996-2)
• The Swift Foot of Time: An Australian in England (1983) (ISBN 0-908128-21-5)
• Writing Round The Edges: A Selective Memoir (2003) (ISBN 0-702233-74-9)

Biographies

• Charles Mackerras: A Musicians' Musician (1987) (ISBN 0-575-036-20-6)
• The Romantic Lives of Louise Mack (1991) (ISBN 0-702-22361-1)

Travel

• Atoll Holiday (1958)
• The Chilean Way: Travels in Chile (1973) (ISBN 0-333-14392-2)
• Morocco is a Lion (1982) (ISBN 0-908-12818-5)
• Pillow of Grass (1969) (ISBN 0-333-10034-4)
• Welcome the Wayfarer: A Traveller in Modern Turkey (1965)

Other non-fiction

• Beginner's Guide to Yoga (1973) (ISBN 0-720-70671-8)
• How to Make Your Own Filmstrips (1954)
• Mosman Impressions (1993) (ISBN 0-646-12976-7)
• Pieces of Heaven in the South Seas (1996) (ISBN 0-702-22756-0)
• Sex and Yoga (with Michael Volin) (1967)
• Some Came Early, Some Came Late (1970) (ISBN 0-333-11896-0)
• Yoga Breathing (with Michael Volin) (1966) (ISBN 0-720-70116-3)
• Yoga For Women (with Michael Volin) (1963)
• Yoga Over Forty (with Michael Volin) (1965)