In this work, a stabilized conservative level-set method is proposed for sharp-interface modeling of two-phase flows. The level-set regularization (sharpening) equation is reformulated as a pseudo Convection-Diffusion-Reaction (CDR) problem, enabling the application of a Variational Multi-Scale (VMS)-based stabilization strategy. This approach allows the use of smaller diffusion coefficients, which greatly enhances robustness in scenarios involving large interface deformations and reduces the risk of nonphysical interface break-up. To further improve stability, the sharpening equation is solved only in a narrow band surrounding the interface, thereby avoiding one of the main instability sources in conservative level-set methods-the reliance on inadequate representation of far-field normal vectors. The employment of this localized formulation is possible within an enriched finite element framework, which naturally supports zero-thickness sharp-interface representations. Restricting the solution domain for the regularization equation not only improves numerical stability but also substantially reduces computational cost. Benchmark validations-including non-zero strain rate velocity field tests, vortex flows, Zalesak's disk problem, two and three-dimensional rising bubbles, and oscillating droplet simulations-demonstrate the framework's excellent mass conservation, accurate pressure jump representation, and reduced parasitic currents compared to the previously developed techniques in this context. Remarkably, the proposed E-FEM/CLS framework achieves these high-fidelity results even on relatively coarse meshes.