In this present paper, we have illustrated the development of a novel linear displacement sensor utilizing the intensity of light. This sensor is based on temporal changes in the intensity of diffuse light beam for the movement of a solid metallic obstacle between the source and detector instead of traditional reflector. An obstacle is moved over open surface of a hollow shaped channel, where light beams impinged vertically into the channel. Two photo detectors has been used to sense the variation of diffuse light intensity at the covered & uncovered area of channel surface due to the movement of obstacle over its open surface. This movement of an obstacle represents the actual target displacement by differentiating the output transformation of two photo detectors; this phenomenon is reported as linear variable differential optical sensor (LVDOS). The measured displacement recorded interns of voltage by the signal processing circuit (SPC). Experimental results are shown a satisfactory performance of the sensor for small range displacement measurement.