A magneto‐optic Kerr effect system for the measurement of magnetization in thin ferromagnetic layers based on a photoelastic modulator is described. The use of a quarter wave plate allows light with a variable polarization incident on the sample to be used. The polarization of the light as it passes through the system is treated algebraically using a matrix approach. A procedure for determining both the magneto‐optic (MO) rotation presented by the sample and the traditional ellipsometric parameters is described, the consistency of the solutions being demonstrated by experiment. Typical MO rotation versus thickness curves for thin films of Permalloy (Ni79Fe21) deposited on glass for both the longitudinal and transverse field configurations are presented. These results demonstrate that the magnitude and sign (in the transverse case) of the MO rotation is strongly dependent on thickness for films thinner than 200 A˚. ©1996 American Institute of Physics.