We report the fabrication and characterisation of magnetic liquid beads with a solid magnetic shell and liquid core using microfluidic techniques. The liquid beads consist of a fluorinated oil core and a polymer shell with magnetite particles. The beads are generated in a flow-focusing polydimethylsiloxane (PDMS) device and cured by photo polymerisation. We investigated the response of the liquid beads to an external magnetic field by characterising their motion towards a permanent magnet. Magnetic sorting of liquid beads in a channel was achieved with 90% efficiency. The results show that the liquid beads can be controlled magnetically and have potential applications in digital microfluidics including nucleic acid amplification, drug delivery, cell culture, sensing, and tissue engineering. The present paper also discusses the magnetophoretic behaviour of the liquid bead by varying its mass and magnetite concentration in the shell. We also demonstrated the two-dimensional self-assembly of magnetic liquid beads for potential use in digital polymerase chain reaction and digital loop mediated isothermal amplification.Graphical abstract