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Low yields of extracted cell-free DNA (cfDNA) from plasma limit continued development of liquid biopsy in cancer, especially in early-stage cancer diagnostics and cancer screening applications. We investigate a novel liquid-phase-based DNA isolation method that utilizes aqueous two-phase systems to purify and concentrate circulating cfDNA. The PHASIFY MAX and PHASIFY ENRICH kits were compared to a commonly employed solid-phase extraction method on their ability to extract cfDNA from a set of 91 frozen plasma samples from cancer patients. Droplet digital PCR (ddPCR) was used as the downstream diagnostic to detect mutant copies. Compared to the QIAamp Circulating Nucleic Acid (QCNA) kit, the PHASIFY MAX method demonstrated 60% increase in DNA yield and 171% increase in mutant copy recovery, and the PHASIFY ENRICH kit demonstrated a 35% decrease in DNA yield with a 153% increase in mutant copy recovery. A follow-up study with PHASIFY ENRICH resulted in the positive conversion of 9 out of 47 plasma samples previously determined negative with QCNA extraction (all with known positive tissue genotyping). Our results indicate that this novel extraction technique offers higher cfDNA recovery resulting in better sensitivity for detection of cfDNA mutations compared to a commonly used solid-phase extraction method.