This paper reports a new heterocyclic system of phosphorus and nitrogen, 1-oxo-2,8-disubstituted-2,5,8-triaza-1-phosphabicyclo[3.3.0]octane 1. A series of recent reports revealed a lot of interesting and novel chemistry of this class of bicyclic compounds. Thus, nucleophilic cleavage of single P-N bond in 1 selectively leads to a new, eight-membered monocyclic product 6 or an isomeric five-membered cyclic product 5. The most interesting observation is that the free eight-membered product 6 spontaneously undergoes a ring-contraction rearrangement to the five-membered compound 5. The lithiation-induced migration of phosphorus to an aromatic carbon in N-aryl substituted 1 provides two new types of bicyclic phosphonic and phosphinic derivatives. The nucleophilic cleavage of the latter produces a new, twelve-membered cyclic phosphinic system 11 containing three amine nitrogen atoms in the ring. The exhaustive hydrolysis of substrates 1 constitutes a feasible synthetic method for substituted polyamines, which are of importance in the coordination chemistry.