The Planet Hunting and Asteroseismology Explorer Spectrophotometer, PHASES, is a concept for a space-borne instrument to obtain flux calibrated spectra and measure micro-magnitude photometric variations of nearby stars. The science drivers are the determination of the physical properties of stars and the characterisation of planets orbiting them, to very high precision. PHASES, intended to be housed in a micro-satellite, consists of a 20 cm aperture modified Baker telescope feeding two detectors: the tracking detector, with a field of 1 degree square, and the science detector for performing spectrophotometry. The optical design has been developed with the primary goal of avoiding stray light on the science detector, while providing spectra in the wavelength range 370-960 nm with a resolving power that ranges from ~ 900 at 370 nm to ~ 200 at 960 nm. The signal to noise per resolution element obtained for a V = 10 magnitude star in a 1 minute integration varies between ~ 35 and 140. An analysis of the light curve constrains the radii of the planets relative to their parent stars' radii, which are, in turn, tightly constrained by the combination of absolute spectrophotometry and trigonometric parallaxes. The provisional optical design satisfies all the scientific requirements, including a ~ 1% rms flux calibration strategy based on observations of bright A-type stars and model atmospheres, allowing the determination of stellar angular diameters for nearby solar-like stars to 0.5%. This level of accuracy will be propagated to the stellar radii for the nearest stars, with highly reliable Hipparcos parallaxes, and more significantly, to the planetary radii.