In this paper, virtual instrument system for the measurement of small displacement using modified operational-amplifier-based dc Wheatstone bridge circuit with strain gauge as sensor has been proposed in which the effect of nonlinearity error and lead resistance is minimized. In this instrument, sensitivity and linearity have been improved in the absence of instrumentation amplifier. The output signal has been found to be linearly related with the displacement. This output voltage has been filtered and interfaced to PC-Lab VIEW through NI-cDAQ. The proposed system is easy to implement and convenient for various applications. In the first phase of the experiment, the bridge performance has been simulated using Lab VIEW and studied with a known variable resistor, and in the secondphase, the same experimentation was done by replacing the strain gauge for the measurement of displacement. The linear characteristics over a wide range of displacement with good repeatability, linearity, improved and variable sensitivity have been described. Copyright © 2012 IFSA.