In this paper, a circuit technique to compensate the temperature effect in the output signal of the linear variable differential transformer (LVDT) is presented. The realization technique is based on the proposed feedback configuration to minimize the active component used in the circuit. The subtraction and sum schemes are provided instead of the error detector used in the traditional feedback loop. The feedback signal is obtained from two secondary winding signals of LVDT. The proposed feedback technique requires only the proportional control action to minimize the error caused by the variation of the ambient temperature. The sensitivity of LVDT is unaffected from the proposed compensation technique. The performances of the proposed technique are discussed in detail and confirmed by experimental implementation using the commercial devices. The maximum percentage error can be reduced from 6.52% of the LVDT output signal without temperature compensation to 0.05% of the proposed technique for the ambient temperature varied from 25[Formula: see text]C to 70[Formula: see text]C. The purpose of the proposed technique is emphasized in terms of high performance, simple configuration and low cost.