This paper presents an analysis and the design of a new flat-type position sensor with an external armature. One excitation coil and two antiserially connected pick-up coils are used in the stationary part. Solid iron segments or steel lamination segments are used for the moving armature. The proposed position sensor was modelled using linear movement. A 2D finite difference method (FDM) was developed and was used for fast analysis for optimizing the sensor. The induced eddy currents in the solid armature were taken into account in the finite difference analysis. The finite difference calculations were compared with 2-D and 3-D FEM simulations and with experimental results. The sensor has a total error of 0.23 mm rms for 36 mm range without any compensation. Unlike previous designs, our new sensor has no moving coil.