A phallic mother is an imaginary mother figure that features in Freudian development theories, one that has been fantastically endowed with a penis.
The figure is related to castration anxiety, which is the irrational, infantile fear that the father will remove the penis because he is the one who can sexually possess mother. (Castration anxiety is the gendered opposite of penis envy.)
In criticism, a phallic mother is a femme fatale like figure, one mythical character that has all of the gendered qualities of a beautiful woman and a powerful man.
Sources: http://www.answers.com/topic/phallic-mother, http://networkologies.wordpress.com/2010/01/30/the-neo-phallic-mother-of-capitalism-in-takashi-miikes-audition/
Postmodernism and its discontents 