A magnetoresistive sensor with encapsulated initialization coil comprises a packaging structure, at least one pair of sensor chips, a spiral initialization coil, a set of wire bonding pads, an ASIC specific integrated circuit and an encapsulation layer. The spiral initialization coil is located on a PCB substrate of the encapsulation structure. Each set of sensor chips comprises two sensor chips, wherein each of the sensor chips comprises two groups of magnetoresistive sensing unit strings. The magnetoresistive sensing unit strings located on the sensor chip are connected to form a magnetoresistive sensor bridge. The application specific integrated circuit, ASIC and the magnetoresistive sensor bridge are electrically interconnected. The sensor chips are located above the spiral initialization coil placed circumferentially along the surface of the spiral initialization coil. The wire bonding pad and the ASIC are electrically interconnected. This sensor design reduces the sensor hysteresis and offset generated by magnetic domains in flux concentrators. It is easy to manufacture at low cost.