Measuring change in inductance
It might be easier to build the inductor into a colpitts oscillator and measure the frequency variations with indutance change.



The circuit above is very easy to get working and I have used it plenty of times in oscillators and VCOs.

Of course you can buy Ti's inductance to digital convertor: -


(source: electronicproducts.com)  

But where's the fun in that?