Unfortunately this is a common
problem for people with brakes with a larger piston capacity than standard. The master cylinder on the car as standard is designed to shift a certain volume of brake fluid for a given level of pedal 'press'. You've now got a larger piston in the brake, so for a given press of the pedal, the same amount of fluid moves, but as the piston is larger, the brake doesn't move as far.
In the S3/TT/Mk4 world, this is a common
problem with people who put massive Porsche calipers on their car expecting a huge increase in braking. Yes, you will get better braking, but perhaps not as good as you would have expected because of this
problem. Keeping the master cylinder and the brake piston volume in the correct proportions minimises this, which is why the Brembo's off the LCR are such a popular upgrade for this platform. Not only do they offer improved braking, but they also better match the standard master cylinder than more exotic stuff on the market.
As Mark says, you need to source and fit a master cylinder which is better matched to the calipers you are using.