The possibility of using quadrant detectors to develop a new optical system that can monitor all six degrees of freedom of mechanical workpieces with very high resolution is investigated. A prototype system based on this approach has been designed and built. Although the system is not fully optimized, our proposed system has already demonstrated some promising results. Using a thermally compensated laser source together with a pinhole spatial filtering system, we have demonstrated that lateral resolution better than 50 nm and angular displacement resolution better than 0.25 rad is achievable with this system. © 1997 Society of Photo-Optical Instrumentation Engineers. [S0091-3286(97)