text: Well, "Phase" is applicable to alternating current, or "AC", and describes the relative change in voltage around a central or "neutral" level. The term "earth" was derived from the potential ( or voltage) of the physical Earth on which we live. Since it is such a large mass, it's electrical potential is considered to be zero volts.\n\nNow, the power stations all generate electricity at a voltage which is relative to earth, and these days is generally of the AC variety (compared to DC, or Direct Current). Anyway, when the power lines are distributed from a power station, they are sent in pairs, one is "active" or "live" and the other is "neutral". The neutral line is connected directly to the earth at the power station. Now either the neutral wire or the physical earth (Earth) can be used as the return path to the power station. In damp earth conditions, the physical Earth does a great job, however in dry conditions, the neutral wire is best, even though there is a small resistance in the power cables back to the power station.\n\nSo, I guess, the difference between neutral and earth is the resistance of the power cables or the conductivity of the Earth.\n\nHope this is not too confusing!