The optimization and performance assessment of a reference-beam, continuous-wave, heterodyne low-power laser radar prototype is presented, based on previous homodyne prototypes. It measures both magnitude and sign of the radial component of the displacement velocity. The basic set-up includes a low power (~3 mW) commercial HeNe laser, a beam-splitter, an acousto-optic modulator, and a two-lens system that both focuses the transmitted beam on the target surface and collects the scattered light. Both the reference beam and the radiation collected are focussed onto a Si avalanche photo-detector. The self-aligned configuration of the receiver makes possible, theoretically, to perform optimal mixing between the received scattered radiation and the reference beam. The resulting electrical signal is fed to a transimpedance amplifier and displayed on a spectrum analyser. Laboratory experiments employing as a target the rim of a 50 cm-diameter rotating wheel placed at several distances have been performed. Results concerning detected signal-to-noise ratio, detected-signal spectral width, accuracy of the radial component of the velocity under measurement and system working range will be presented and discussed.