Polymerization-based signal amplification (PBA) has emerged as promising colorimetric biodetection method for point-of-care diagnostics because it is affordable, rapid, and instrument-free. PBA produces phenolphthalein-conjugated hydrogel in the presence of analytes, so the red detection signal can be seen with the naked eye when the hydrogel is exposed to a basic solution. Since no hydrogel forms in the absence of analytes, PBA achieves high contrast between positive and negative results in diagnostic tests. Thus, PBA can reduce subjectivity in interpretation of the results by untrained users compared to other competing methods based on enzymes and gold nanoparticles. However, low sensitivity of PBA makes it impractical for early diagnosis of many diseases. Here, we demonstrate that eosin Y-loaded liposomes can successfully increase the amount of eosin Y, photoinitiator, per binding event and improve the detection limit of PBA. Comparison between liposome-enhanced PBA and conventional PBA using fluorescence microscopy and colorimetric image analysis indicated that liposomes improved sensitivity of PBA by 30-fold, but detection limit by only 3-fold due to increased non-specific binding compared to conventional PBA. To selectively increase specific binding signals in liposome-enhanced PBA, we used continuous flow-through format assay with 10× volume of analyte and additionally improved both sensitivity and detection limit by 10-fold because we maintained non-specific binding signals. As a result, we achieved sub-nanomolar detection limit with very high contrast signals. Our results indicate that detection limit of PBA can be improved by delivering more eosin Y molecules to binding region with improved solubility and releasing encapsulated eosin Y to prevent fluorescence self-quenching, and minimizing non-specific binding is the most important thing to improve detection limit.