Nano-sized fine droplets of liquid crystal (LC) were obtained by phase separation of nematic LC in UV curing polymer. The polymer composite had a high transparency in the infrared region. The fine droplets responded to an electric field causing a change in birefringence. Output power change was brought about by the generated retardation between two polarizations, parallel and perpendicular to the applied electric field. This differs from the composite containing much larger droplets, where output depends on the degree of scattering. The birefringence changed by 0.001 at the applied voltage of 7.5 V/μm.