A feedback signal of the rotor radial displacement is essential for realizing the stable suspension for bearingless flux-switching permanent magnet machines (BFSPMMs). Although the recent smart sensors technology is developing rapidly, the mechanical sensors will increase the complexity of the system while reduce its reliability. Thus, an alternative is urgently needed to achieve the compact and practical motor structure. Herein, a novel rotor radial displacement observer is presented, and a radial displacement sensorless control system based on the observer for a BFSPMM is built. First, the mathematical model of the motor concerning rotor eccentricity is established. The theoretical expressions of flux linkages are derived, which are closely related to the eccentric distance and angle. Second, the rotor displacement signal is estimated by the difference of the symmetric-winding flux linkages. And a closed-loop compensation method is designed to reduce the phase lag of the signal in the observer due to the filter. Besides, the convergence regarding the proposed observer is analyzed. Ultimately, the observed result is used as a feedback signal to control the suspension force of the system. The simulation and experimental results verified the validity of the proposed scheme.