There is an increasing need for developing simple assay formats for biomedical screening purposes. Assays on cell membranes have become important in studies of receptor-ligand interactions and signal pathways. Here luminescence energy transfer was studied on liposomes containing europium ion chelated to 4,4,4-trifluoro-1-(2-naphthalenyl)-1,3-butanedione and trioctylphosphine oxide. Energy transfer efficiency was characterized with biotin-streptavidin interaction, and a model assay concept for a homogeneous time-resolved luminescence resonance energy transfer (LRET) assay was developed. Acceptor-labeled streptavidin was bound to biotinylated lipids on the liposomes, leading to close proximity of the LRET pair. The liposome-based LRET assay was optimized for dye incorporation and concentration, biotinylation degree, liposome size, and kinetics. Sensitivity for a competitive biotin assay was at a picomolar range with a coefficient of variation from 7 to 20%. The developed lipid membrane-based system was feasible in separation free LRET assay concept with high sensitivity, indicating that the assay principle can potentially be used for biologically more relevant target molecules.