We explore the polarization dependence of the nonlinear response of a planar nematic liquid crystal cell doped with 1% wt of methyl red dye. The results obtained show that the refractive index change can be switched from a positive value to a negative one as the polarization of the beam changes from parallel to perpendicular with respect to the rubbing direction. This property is exploited in a phase contrast system, where a dynamic phase filter is photoinduced in a liquid crystal cell placed in the system’s Fourier plane. Real-time contrast inversion in the resulting images is demonstrated.