For sensing linear or angular displacement, potentiometric type displacement sensors are preferred due to the simplicity in their construction and operation.The limited operating life of conventional inductive voltage divider type displacement sensor is due to wear and tear, as the wiper has to rub against the inductive element during operation. This problem can be eliminated by using a floating wiper. However, the absence of physical contact between the wiper and the coil leads to capacitive coupling, thus demanding the use of complex signal conditioning circuitry to obtain an output proportional to displacement. In this work, a simple signal conditioning circuitsuitable for a floating wiper inductive displacement sensor is proposed. It employs successive approximation algorithm and provides a digital output that is proportional to displacement. The output is independent of the value of coupling capacitance. The results obtained from simulation studies and the tests conducted on a prototype built, establish the efficacy of the proposed method.