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An He-Ne laser with enhanced sensitivity to small displacements is described. The laser is forced to oscillate in two longitudinal modes by an internal mode selector of the Fox-Smith interferometric type. Displacements are induced in one arm of the mode selector and cause a frequency modulation of the beat frequency between the two modes. Experimental data is presented which demonstrate that the frequency modulation varies quadratically with the displacements. This behavior is explained in terms of changes in the dispersive index of refraction of the amplifying medium, induced by the displacements. The laser beat frequency has a displacement sensitivity of Hz/cm and a noise equivalent displacement of 10-12cm/Hz1/2. The system was used to measure displacements on the order of 10-4Å.