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?

A PHP encoder or obfuscation tool like ionCube Encoder is ideal for encoding PHP code to protect your source code from unauthorized access and modification.

1. PHP Obfuscation (Makes code harder to read)

These tools rename variables, functions, and classes while preserving functionality.

Yak Pro - PHP Obfuscator (free, open source)
PHP-Scoper (primarily for prefixing namespaces and avoiding dependency conflicts)
phpBolt (older obfuscation tool)

Best for: Discouraging casual code copying.

2. PHP Encryption/Encoding (Requires a loader to run)

These tools compile or encrypt PHP scripts so the original source code isn't directly accessible.

ionCube ionCube Encoder – The industry-standard solution for protecting commercial PHP applications. Requires the ionCube Loader on the server.
SourceGuardian SourceGuardian – Encrypts and licenses PHP code with loader support.
Zend Zend Guard – Historically popular but discontinued. Existing encoded files may still be in use.

Best for: Distributing commercial PHP software while protecting source code.

3. Encoding Text/Data in PHP

If you simply want to encode data (not hide source code), PHP provides built-in functions:

base64_encode() / base64_decode()
json_encode() / json_decode()
urlencode() / urldecode()

Note: Base64 is not encryption or security—it only changes the representation of data.

Recommendation
To protect a commercial PHP application: Use ionCube Encoder.
To make code harder to understand while keeping it deployable: Use an obfuscator such as Yak Pro.
To encode data within your application: Use PHP's built-in encoding functions.

ionCube Encoder – widely used for protecting commercial PHP applications; works with the ionCube Loader.
SourceGuardian – encodes PHP scripts and protects them from straightforward source-code access.
PHP Obfuscator tools – useful for basic code obfuscation, though generally weaker than commercial encoders.