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Phoebe Jane Elizabeth Tonkin was born on July 12, 1989 in Sydney, Australia to Jane and Nicholas Tonkin. She has one sister named Abby. Phoebe began performing at the age of four, beginning with dancing courses in classical ballet, hip hop, contemporary, and tap. Phoebe also attended Loreto Kirribilli, a Catholic school for girls, and later graduated from Queenswood School for Girls. Despite her love of dance, by the age of ten, she knew exactly what she wanted to be - an actress. Two years later Phoebe began courses at the Australian Theatre for Young People at the Wharf Theatre. Her credits include the role of Helena in Shakespeare's A Midsummer Night's Dream and Don Pedro in Much Ado About Nothing, also by Shakespeare. Phoebe's big break in Australia came from her leading role as Cleo Sertori in the tv series H2O: Just Add Water which follows the lives of three teenage girls who turn into mermaids. Tonkin and her fellow cast members improved their swimming abilities during the pre-production of the series. While only 52 episodes were originally planned, the series continued for a third and final season due to popular demand, and in fact, the show was so popular in it aired in over 120 territories world-wide and reached an audience of 250 million.

In 2008, Phoebe was nominated for Best Lead Actress in a Television Series by the Australian Film Institute Awards. The following two years were busy for the young actress as she made guest appearances on the popular series Packed to the Rafters and Home and Away as Lexi and Adrian Hall, respectively. The former starred H2O's Angus McLaren. During this time, she also co-starred in her first feature film as Fiona Maxwell in Tomorrow When the War Began, based off the young adult book series. A sequel was announced, but unfortunately never came to production. By January 2011, Phoebe moved to Los Angeles; however, she returned to Australia that same year to film the horror disaster movie, Bait 3D with former H2O co-star, Cariba Heine.

In March 2011, after two months in Los Angeles, Phoebe was cast on the CW's The Secret Circle as Faye Cahmberlain. The series filmed in Vancouver, Canada, and premiered in September 2011 to over 3.5 million viewers. For her performance, Phoebe received critical acclaim, with critics referring to her as the breakout star of the series; she was featured on Variety's list of "new faces to watch" and named one of 2011's breakout TV stars by E! Online. However, due to the series' declining viewership and high production cost, it was cancelled on May 11, 2012 after only one season. By August 2012, Phoebe was cast as Hayley Marshall in a recurring role on the CW's incredibly popular show The Vampire Diaries. Her first episode aired on October 25, 2012. She joined former H2O co-star, Claire Holt, who portrayed Rebekah Mikaelson, an original vampire, on the series.

On January 11, 2013, the CW confirmed that a spin-off series of the Vampire Diaries was in production and would be titled The Originals. The series revolved around the original vampire family members - the Mikaelsons, and it was announced Phoebe would "be heavily featured in the prospective pilot" of the series. The backdoor pilot aired on April 25, 2013 and was quickly picked up for a full fall series to premiere on October 3, 2013. Claire Holt also joined the show for the first sixteen episodes. When Holt left the show, Phoebe took over as the sole female lead. While filming the Originals, Phoebe has appeared in a guest starring role on the show Stalker, reuniting for a third time with Kevin Williamson, executive producer of The Secret Circle. She has also co-starred in The Ever After, starring best friend, Teresa Palmer, and starred as female lead in Billionaire Ransom (aka Take Down) with Jeremy Sumpter and Ed Westwick. In December 2015, she filmed her second short film Cul-de-Sac which premiered at the Toronto International Film Festival on September 9, 2016.

While in France in early March 2017 to attend Chanel's Show at Paris Fashion Week, Phoebe received the news that she had been in cast in SBS's upcoming thriller mini-series, Safe Harbour. The announcement of Phoebe's new project came on May 15, 2017. Filming wrapped in mid-June. That following month, Phoebe began filming the fifth and final season of the Originals, slated to air in April of 2018. Soon after the show finished filming, TVLine announced that Phoebe would play a guest role in the critically acclaimed Showtime series The Affair. Sarah Treem, the showrunner, saw Phoebe's audition for another role and praised her performance as "smart and striking". The Affair will premiere in June 2018.

Prior to her move to the United States, Phoebe appeared in commercials for Vauxhall Motors, Just Jeans, and Old Navy. She was previously signed to Chic Management. Her modeling career includes shoots for Girlfriend, Teen Vogue, ELLE Australia, Miss Vogue Australia, Vogue Australia, Dolly and Free People. Phoebe is currently the face of Matteau Swim, an international swimsuit line by Ilona Hamer and Petra Heinsen. In 2012, Phoebe played the female lead in Miles Fisher's "Don't Let Go" music video. That same year Phoebe launched the website Your Zen Life with Teresa Palmer; however, due to Phoebe's commitment to the Originals, she eventually stepped down as a contributor to the site. Continuing her interest in fashion, Phoebe participated in Ellery in Paris, a documentary filmed in September 2013 about Kym Ellery - the third Australian fashion designer to be invited to Paris Fashion Week in the last twenty years. She has also led a campaign for Jan Logan, an Australian jewellery design house, along with appearing in a short film for the design house titled Sunrise to Sunset Blvd in 2014.

Phoebe remains close friends with her Secret Circle co-stars, Shelley Hennig and Britt Robertson. In 2017, Phoebe relocated from Atlanta, Georgia and New York City to Los Angeles.