This paper describes a contactless differential torque sensor for use in a steering column of a vehicle having an all-electric power steering assist system. The basic concept of an eddy current surface-effect phase shift sensor is described along with its equivalent electrical circuit. A configuration giving low drift and good linearity is proposed. One low-cost method of exciting the sensor and demodulating the signal is shown. Characteristics, a block diagram of an overall electric assist steering system using the sensor and potential advantages of electric power steering are provided.