In the field-oriented control of an induction machine, a full-order flux observer has been widely used to estimate the flux. It has several critical issues, such as discrete-time domain instability, dynamics deterioration, and another instability in a low-speed sensorless flux estimation. This paper addresses and analyzes these three issues. And it proposes a feedback gain design method for the full-order flux observer to solve the problems. Additionally, the parameter sensitivity in the flux estimation is analyzed with a frequency response function. The experiments were conducted with an EV-traction induction machine. The results show the performances of the proposed feedback gain design in the high-speed operation over the conventional discrete-time domain stability limit, the dynamics improvement in mid- and high-speed region, and the stable operation in the low-speed regeneration mode.