Cell-wall deficient bacterial L-forms are induced by exposure to cell-wall targeting antibiotics and immune effectors such as lysozyme. L-forms have been reported only rarely in human infections. Here we show that members of a representative diverse set of pathogenic Escherichia coli readily proliferate as L-forms in supratherapeutic concentrations of antibiotics that target penicillin-binding proteins. Reversion to the cell-walled state occurs efficiently, within 20 hours after antibiotic withdrawal, with few or no changes in DNA sequence and same susceptibility to cell wall targeting antibiotics as the parent form. We defined for the first-time the logarithmic L-form phase, demonstrating a doubling time of 80-190 minutes, followed by a stationary phase in late cultures. We show that L-forms are metabolically active and susceptible to antibiotics that affect DNA torsion and ribosomal function but exhibit high tolerance to oxidative stress and are completely resistant to antibiotics targeting any of the penicillin-binding proteins. Surprisingly, we also found that common T4-like bacteriophages which act as obligate lytic phages of cell-walled forms, and are those most widely used therapeutically, preferentially hibernate in a pseudolysogenic state of replicating L-forms. This allows survival of prey bacterial populations, permits immediate reversion to a productive lytic cycle for phages when bacteria revert to logarithmically growing walled forms, and promotes phage resistance in the pseudolysogenised bacteria. Our findings provide fundamental insights into the biology of L-forms and help us understand the risk of β-lactam and phage failure in persistent infections in which L-forms are expected to be common.