The permeability of the Fe Soft Magnetic Composite (SMC) materials need further improve to broaden their application prospect. This research work presents a novel high permeability SMC material which has a low core loss (Pcv). The Fe particles formed an elongated strip shape structure through the ball milling process, and the high permeability Mn0.5Zn0.5Fe2O4 ferrite phase was formed around the elongated strip shape Fe particles via a high temperature in-situ reaction process (ZnO + MnO + Fe2O3–Mn0.5Zn0.5Fe2O4). While the added high resistive SiO2 phase aggregated at the long strip shape Fe particle outer surface and effectively increased the resistivity of the SMCs. As the percentage of the Mn0.5Zn0.5Fe2O4 ferrite coating increase, the permeability of the double layer coated SMCs gradually increased from 38 for the 1 wt% Mn0.5Zn0.5Fe2O4 coated SMCs to 170 for the 18 wt% Mn0.5Zn0.5Fe2O4 coated SMCs. The 3 wt% Mn0.5Zn0.5Fe2O4 coated SMCs has the lowest core loss (Pcv) of 86.9 W/kg at 10 mT, 500 kHz.