An improved procedure for fabricating step-edge Josephson junctions by YBCO on NdGaO3 substrates is described. It is based on a reactive patterning of the superconducting film geometry by using a SiOx inhibit process. SQUID's have been fabricated following this technique. Preliminary measurements on the transport properties in single junctions and on the magnetic response in DC SQUID's are reported. Promising results have been obtained at T=4.2 K.