This paper presents a novel digital converter for a contactless displacement transducer. The sensor part of the proposed transducer employs a floating (contactless) wiper that moves over a resistive element. A novel signal-conditioning circuit presented here operates on the contactless resistive potentiometer element and provides a digital output that linearly varies with the position of the wiper. The signal-conditioning circuit is developed such that the digital output is independent of the coupling capacitor that arises between the floating wiper and the resistive element, thus eliminating the effect of any jitter that may arise in the movement of the wiper. Results from a prototype circuit built and tested using a prototype sensor establish the efficacy of the proffered scheme. © 2015 IEEE.