A new synthetic procedure for the preparation of hydrophilic phosphines based on the palladium catalyzed P-C coupling of mono and multiply functionalized aromatic bromides and iodides with primary and secondary phosphines has been developed. In addition to multiply functionalized anionic phosphines and those bearing electron rich substituents like OH, NH2 cationic guanidinium type phosphine ligands are accessible by this method in high yields. The novel guanidinium phosphines are readily soluble in water showing a remarkable stability in a wide pH range. They turned out to be quite effective catalyst ligands in Rh catalyzed hydroformylation reactions and Pd catalyzed C-C coupling in two-phase systems and aqueous solutions.