Magnetic sensors are widely used in health management systems for turbomachinery, but their applications in the hot zone are limited due to the loss of magnetic properties by permanent magnets with increasing temperature. The paper presents and verifies models and design solutions aimed at improving the performance of an inductive sensor for measuring the motion of rotating objects operating at elevated temperatures (200-1000C), such as compressor and turbine blades. Physical, analog and mathematical models of the interaction of blades with the sensor were developed. A prototype of the sensor was made and its tests were carried out on the RK-4 rotor rig for the speed of 7000 rpm, in which the temperature of the sensor head was gradually increased to 1100C. The sensor signal level was compared to that of an identical sensor operating at room temperature. The heated sensor works continuously producing the output signal whose level does not change significantly. What is more, a set of six probes passed an initial engine test in an SO-3 turbojet. It was confirmed that the proposed design of the inductive sensor is suitable for blade health monitoring of the last stages of compressors, steam turbines as well as previous generation gas turbines operating below 1000C, even without a dedicated cooling system. In real-engine applications, sensor performance will depend on how the sensor is installed and the available heat dissipation capability