In this article, we implement and analyze a locally modified parametric finite element method for fluid structure interaction problems using LBB-stable finite elements. The variational formulation of the monolithically coupled fluid structure interaction problems is solved using a fully Eulerian framework. A combination of Q2-Q2-(Q1+Q0dc) and P2-P2-(P1+P0dc⁎) finite elements are used to approximate the globally defined velocity-displacement-pressure fields. The edges of the grid cells through which interface is passing, are re-aligned to ensure that interface geometry is captured by the grid efficiently. Values of degrees of freedom corresponding to nodes belonging to such cells are updated using Galerkin projection. The numerical simulation results of the new framework were found to be in good agreement with standard benchmark problem data and reference values. The finite element framework was also extended and tested for adaptive grid refinement.