If by encoding PHP code you mean protecting it from being easily read or modified while still allowing it to run on a server, the most widely used tool is:

ionCube Encoder — Compiles and encodes PHP scripts, supports licensing features, and requires the free ionCube Loader on the server.

Other options include:

SourceGuardian — Encodes and protects PHP applications with licensing and expiration features.
PHP Obfuscator — Makes code harder to read but does not provide the same level of protection as a commercial encoder.

If instead you mean:

Base64 encoding PHP code → built-in PHP function base64_encode().
Encrypting PHP source code → use an encoder such as ionCube or SourceGuardian.
Encoding text/data within a PHP application → the appropriate tool depends on the format (Base64, URL encoding, JSON encoding, etc.).

Can you clarify what you mean by "encoding PHP code"—source-code protection, encryption, obfuscation, or data encoding?