A laser interferometer system based on three design principles, the heterodyne frequency, the avoiding mixing, and the perfect symmetry, is described. These design principles give rise to the interferometer a high stable system with no periodic nonlinearity. This system is capable of providing both displacement and straightness measurements. The arrangement of invention employs a single frequency stabilized input beam from a laser source which is provided to a frequency-shifted means for converting the input beam into a pair of spatial-separated beams having the same optical properties but different optical frequencies. Two identical energy splitters further split the spatial-separated beams into a pair of measurement beams and a pair of reference beams respectively. The measurement beams are incident onto the measurement target and reference target respectively. The returning beams from both measurement and reference targets are redirected by a measurement branch and then make interference with the reference beams, respectively, at a reference branch. The interfered beams then are provided to a set of photo-receivers to produce an interferometric measurement signal and an interferometric reference signal. These electrical signals are processed in a phase meter to produce an output signal which is proportional to the optical path difference (OPD) between the measurement target and the reference target. To measure the straightness errors of a moving carriage, both measurement and reference targets are replaced by a straightness prism and a straightness reflector, respectively.