In recent years the focus on quality control in steel industry has shifted from offline to inline non?destructive testing (NDT) in order to detect defects at the earliest possible stage in the production process. The detection and elimination of such defects is vital for sustaining product quality and reducing costs. Various measurement principles (e.g. ultrasonic testing, EMAT, X?ray inspection) were analyzed and their advantages and disadvantages are discussed regarding the usability in a steel plant. Based on these findings a magnetic method combined with a new sensor concept was chosen. By using highly sensitive sensors based on the giant magneto resistive effect (GMR), it is possible to detect magnetic flux leakage variations on the surface of a magnetized steel strip caused by defects or inhomogeneities inside the material. Based on obtained promising measurement results of preliminary tests and simulation results obtained by FEM?models, a prototype is now being built for offline measurements and the optimization of the measurement method. In the event that the development of this second prototype is successful, an inline configuration will be implemented.