Several technologies have attempted to measure displacement of objects inside the human body; some of the leading challenges addressed by those technologies are measurement precision, the capacity to operate without clear Line-of-Sight (LOS), susceptibility to electromagnetic interference from other medical instruments, miniaturization, cost effectiveness and safety for both the patient and the medical personnel. The proposed novel method for measuring displacement and tracking the position of a medical instrument inside a human body achieves sub-millimeter accuracy, is characterized by a potentially low cost at high production volumes. It is simple to implement from the biomedical engineering point of view and has been developed to improve the function of medical devices used for invasive or minimally invasive surgery (MIS). This method is based on measuring phase shift displacement at an operating frequency in the gigahertz (GHz) range. The phase shift is detected from the signal emitted by a transmitter, which has been integrated into the medical instrument, with respect to a fixed receiver. It is subsequently translated into a very low frequency voltage, which carries all necessary information concerning transmitter displacement. Simulation results using Verilog-A models and the Spectre simulator provide a mathematical proof of concept model for our novel system design. These results were consequently validated using an experimental setup, which provided millimeter precision results, by the use of commercialy available discrete components and low cost measuring equipment.