Currently, in a process of manufacturing a top spin valve structure, the shield-to-shield separation of a spin valve head cannot be below about 800 .ANG., mainly due to sensor-to-lead shorting problems. This problem has now been overcome by inserting a high permeability, high resistivity, thin film shield on the top or bottom (or both) sides of the spin valve sensor. A permeability greater than about 500 is required together with a resistivity about 5 times greater than that of the free layer and an M.sub.rT value for the thin film shield that is 4 times greater than that of the free layer.