Some letters (like B,D,T,V,P etc) sound similar and create confusions. This is avoided by using common known (not similar sounding of course) words.
When in person people can see the lip movements and be sure of what the other one is saying. Over the phone one can't see that and may take one of those similar sounding letter to be another and take actions. Often these situations are the serious ones and people don't have the luxury to lose minutes over clearing confusions, hence they use words.
There is in fact a list of words, internationally agreed to be used in such situations: NATO phonetic alphabet
The 26 code words in the NATO phonetic alphabet are assigned to the 26
letters of the English alphabet in alphabetical order as follows:
Alfa, Bravo, Charlie, Delta, Echo, Foxtrot, Golf, Hotel, India,
Juliett, Kilo, Lima, Mike, November, Oscar, Papa, Quebec, Romeo,
Sierra, Tango, Uniform, Victor, Whiskey, X-ray, Yankee, Zulu.
Also from the same source,
The pronunciation of the digits 3, 4, 5, and 9 differs from standard
English – being pronounced tree, fower, fife, and niner. The digit 3
is specified as tree so that it is not pronounced sri; the long
pronunciation of 4 (still found in some English dialects) keeps it
somewhat distinct from for; 5 is pronounced with a second "f" because
the normal pronunciation with a "v" is easily confused with "fire" (a
command to shoot); and 9 has an extra syllable to keep it distinct
from German nein 'no'.
EDIT: Police forces have a different set of words and is listed underAPCO radiotelephony spelling alphabet which may vary from one police department to another.