The quality of the knitted fabric is an important factor in the knitwear industry. On circular knitting machines the fabric quality is improved by using the positive storage feeding device which delivers the length of the yam to the needles in order to form stitches at a constant rate. Yam tension, yam properties and elongation of the yam are important parameters influencing course length in the knitted fabric. However, course length is the most important parameter that determines the dimensions of the knitted fabrics. Therefore, a mathematical analysis was carried out to study the feasibility of using yarn length measurement in order to improve the fabric quality and the process efficiency. A PC based system was created to monitor important information such as yam run-in length, running machine condition, yam breakage, needle breakage, machine and time performance during the normal operation. An addition sensor was installed in order to determine the above parameters. Special hardware and software were developed for monitoring and analysing the knitting process parameters in real-time.