A microwave system for very sensitive dielectric measurements on high‐loss liquids over the frequency range 8–26.5 GHz is described which depends on the cavity resonance perturbation method. Equations for the resonance perturbation by a thin capillary in cylindrical as well as in rectangular cavities are derived, demonstrating the dependence of the real and imaginary part of &egr; on both the resonance frequency shift and the change in resonance width of the cavity. The microwave generator with high frequency stability (1 part in 108) is frequency modulated at one or two frequencies. The use of phase sensitive detection allows &egr; measurements on water to within 1%, as well as dielectric difference measurements on aqueous solutions to within 0.005 in &Dgr;&egr;′ and &Dgr;&egr;″(1 part in 104or better). Details of cavity constructions are given and some measurements on water and on dilute aqueous solutions are reported.