AbstractIn this work, a simple but effective algorithm was developed that can perform 3D simulations of magnetic fields emanating from coils and simple geometry objects in the time‐harmonic domain. The software was intended to provide information that would help in an inductive sensor design, by simulating the interaction of the excitation field with objects with and without defects positioned within the field space of an inductive sensor. The object field was disturbed in all its three components in the presence of a 3D defect. The change in magnetic field intensity caused by the defect was of the order of 104 times smaller than the excitation field at a distance of 15 cm from the objects. This suggests that a large amplification factor should be used in the sensor design. The main contribution of this article lies in the fact that a passive inductive sensor could be modelled by finite difference time domain, with enough details on how it would respond to metal objects and its defects. Copyright © 2007 John Wiley & Sons, Ltd.