No storage on iPhone but can't delete because of iCloud

Turn on optimisation on the phone (settings > photos & camera > optimisation)

I've just noticed you have a 16 GB phone and a 300 GB library, optimisation can reduce a library to 10% or even less but you may just be asking too much of a 16 GB phone.

Do you know what else is taking up space on your phone?

Can you hook it up to iTunes - look in the summary and note the colored bar at the bottom and post a picture?

I think you need to find out for certain what size of library you can expect to fit on your phone, but I'm inclined to think you may either have to accept you can't use iCloud photo library on your phone or get yourself a larger phone.

As I keep saying you need to get verification about this, because 300 GB of photos in iCloud on a 16 GB phone is uncharted es territory for me. I suspect it's not possible using iCloud Photo Library, I guess you can use iCloud Drive and put them in folders.

One way to get around this - if you have already gotten everything you need off the phone

Hook up to iTunes - restore as new

Then re add everything back that you need

It will clean out the clutter including corrupt image files that may still be taking up space

But again - it is not a small endeavor

You are wanting the iCloud photo library to be something it is not. As Winston hints at, I doubt you can squeeze 300GB of photos on to a 16GB phone.

It is *not* off device storage. It is meant to sync your content across all your devices, with the caveat that the smallest storage space device being the limiting factor. It's purpose is to allow you access to your photos from any of your Apple devices.

If space is an issue, maybe use Photo Stream instead, but know that it is only going to "keep" 1000 photos or for 30 days, whichever happens first.