A Michelson interferometer based sensor, to monitor the displacement and vibration of a surface, is presented. The interference signals detected in quadrature are processed using analog electronics to find the direction of the motion of a vibrating surface in real-time. The complete instrumentation and signal processing are implemented for the interpretation of the amplitude as well as positive and negative excursion of the vibration cycles. This new technique is simpler as compared to the techniques commonly used in the interferometer based vibration sensors. Using this technique, we have measured mechanical vibrations having a magnitude of the order of nanometers and frequency in the range of 50 Hz to 500 Hz. By making small changes in the electronic circuit, the technique can be implemented for the extended range of the vibration frequencies and amplitude.