Clathrin-mediated endocytosis is initiated through an unknown mechanism by a network of weakly interacting proteins. Ede1, the yeast homologue of mammalian Eps15, is an early-arriving endocytic protein and a key initiation factor. In the absence of Ede1, most other early endocytic proteins lose their punctate localisation and the frequency of endocytic initiation is decreased. We show that in yeast cells, an excess of cytoplasmic Ede1 forms large condensates which recruit other endocytic proteins and exhibit properties of phase-separated liquid droplets. We identify a region of Ede1 which is essential both for the formation of the condensates and for the function of Ede1 in endocytosis. Fusion with the Ede1 central region can promote clustering of a heterologous lipid-binding domain into stable plasma membrane domains that repeatedly initiate endocytosis. We propose that the phase separation of Ede1 promotes the clustering of the early endocytic proteins.