Humberside Police had blundered by running his fingerprints through their computer as those belonging to the potential burglar.
His details came up because of a single motoring offence a few years ago.
Had police spoken to Phelan or his immediate family the misunderstanding would have been cleared up quickly.
But the first the unfortunate married father of two knew about the mistake was when friends and relatives saw his picture in the newspaper and phoned him.
Police have now apologised, but self-employed Phelan, who was the subject of abuse on social media before the mistake was corrected, fears his business will suffer.
"I am disgusted with the police," he said. "They can't apologise enough as far as I am concerned because the damage has already been done.
"People have been slating me on Facebook saying things like, 'He'll never work in this city again.' I could have been arrested. I actually let the scenes of crime officer into the place. I've been a locksmith for 20 years and have never heard about this happening before."
His daughter Charlotte Phelan, 22, said: "He felt sick as soon as he saw it, he has been really worried."
Humberside Police regularly provide the local paper with details of wanted criminals for publication in the hope that tip-offs will enable detectives to arrest them. The others named and pictured were all wanted for burglaries.
A detective was quoted in the newspaper as appealing to the suspects to "hand themselves in to avoid facing arrest in front of friends and family".
Detective Inspector Allison Sweeting said: "We confirm that Christopher Phelan is not wanted by us and we apologise sincerely for issuing an appeal to locate him.
"It was never our intention to cause Mr Phelan and his family any upset or embarrassment and can only apologise for our mistake. Our investigations mistakenly identified Phelan as being involved in a burglary, when in reality he attended the scene as a locksmith."
Humberside Police added: "To help prevent this happening again we have commissioned a review of our processes for future wanted appeals.
"This is to reassure ourselves that this type of appeal is always used appropriately and proportionately as part of an investigation, balancing the privacy and rights of all concerned."