In this work the on-line unbalance parameter identification problem in a rotor-bearing system is dealt by an algebraic approach. The system has two disks asymmetrically located along the shaft which is supported by a conventional ball bearing at one end and by an active suspension at the other one. The Finite Element Method (FEM) is used in order to obtain a reduced order model for the rotor-bearing system. The identification process is carried out on-line and the proposed method requires only the lateral shaft displacements at the disks׳ location measurements to estimate both, disturbance forces caused by unbalance and eccentricity parameters. FEM model and identified unbalance parameters are used to synthesize an active control scheme in order to attenuate the lateral vibration amplitudes in the rotor-bearing system. Numerical results show the fast convergence of the estimated parameters and disturbances to the real ones and considerable reductions in vibration amplitudes when the system passes through its first critical speed.