Hall began day four one shot behind Phatlum, but a birdie on 16 and a double bogey from her Thai opponent on 17 handed Hall the advantage.
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4 HE named Georgia in honour of Sir Nick Faldo's Masters win in 1996, having been born on the Friday of that victory in Augusta, Georgia. She earned $490,000 for the victory.
9 AHEAD of a tournament in Abu Dhabi previous year, Hall hit a drive of 579 yards on Yas Marina race track, believed to be the world's longest drive by a female golfer. "I love links golf and I am playing in England which is very rare so it is nIce to make the most of the opportunity".
"I got a lot of experience, and just very nervous today, more nervous".
Should Higa win the tournament, she will become only the second Japanese to capture a major.
Hall, who receives a check of $490,000, became the first English major victor since Karen Stupples won this event in 2004, and the fourth overall along with Laura Davies and Alison Nicholas.
The 22-year-old from Bournemouth is just the third home victor of the event since it became a major in 2001, following in the footsteps of Karen Stupples (2004) and Catriona Matthew (2009).
Roared on under blue skies by the large gallery desperate for a home victor, the 39th-ranked Hall started the day a shot behind Phatlum, who led after the second and third rounds.
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Sunday's victory was not only Hall's first major, it was her first win of any kind of the LPGA Tour or Ladies European Tour.
Phatlum's playing partner Georgia Hall of England is one shot off the lead and South Korea's Ryu So-yeon is one shot behind Hall.
She stamped her authority with three birdies in a four-hole stretch to beat Thailand's Pornanong Phatlum by two strokes at Royal Lytham & St Annes.
She birdied three of the last four holes to join Pornanong in the final group on Sunday.
Her title triumph was greeted with the same acclaim by the home fans as when Tony Jacklin won the Open Championship here in 1969.
"I thought I'd cry", the 22-year-old Hall said.
"It was my goal when I was nine-years old on the putting green, pretending to hole six-footers for the British Open". "I'm not allowed to show any emotion because if I show I'm happy that's not right", dad Wayne said. "I knew if I stayed patient and kept working hard I could win and it would come along".
Hall, who had tied for third at Kingsbarns 12 months earlier, hit the front for the first time all week with just two holes to play.
Behind Phatlum in the lead, two-time major victor So Yeon-Ryu from South Korea is third, while Japan's Marmiko Higa is in a tie for fourth.
PGA - Justin Thomas took all the drama out of the final World Golf Championship at Firestone, never letting anyone closer than two shots and closing with a 1-under 69 to win the Bridgestone Invitational in Akron, Ohio, for his third title this season.