The magnetoresistance and magnetization of (La2/3Sr1/3MnO3)x(LSMO)/(CeO2)1−x (0.64⩽x⩽1) composite thick films have been studied as a function of the manganite concentration. It is found that for high LSMO content, when the applied magnetic field is perpendicular to the film plane, the attainable low field magnetoresistance (LFMR) response is drastically reduced due to demagnetizing field effects. These effects are suppressed when the concentration of CeO2 is increased, thus an enhancement of the LFMR is observed. These results can be very important for developing magnetic sensors working in the low magnetic field regime when magnetic field needs to be applied perpendicular to the film plane.