Recently, there has been an increase in the positioning accuracy that is required in the production processes of ULSI, magnetic disks and optical disks. for instance, in a wafer stepper for 4 Mbit DRAM, the required positioning accuracy is said to be more than 0.04μm. There is also a requirement to reduce the positioning time in such processes. To meet these needs, the authers developed a new laser measurement system which can measure displacement with high accuracy and high measurement speed. When the speed is low, the displacement of the object is measured by comparing the phase change of a light reflected by the object with the phase modulated by an electro-optic crystal. When the speed is high, the displacement is measured using a fringe counting technique. The system achieved an accuracy of ±4 nm, and a maximum allowable measurement speed of 1000 mm/s.