The sensor requirements of a nanopositioning system are among the most demanding of any control system. The sensors must be compact, high-speed, immune to environmental variation, and able to resolve position down to the atomic scale. In many applications,such as atomic force microscopy [1,2] or nanofabrication [3,4], the performance of the machine or process is primarily dependent on the performance of the position sensor, thus, sensor optimization is a foremost consideration.