This paper presents a non-contact, optical metrology system that allows to measure the pistons and tip/tilt angles of a compact-sized, flat segmented mirror, with nanometer resolution, from a long working distance of a few meters. The system is developed in the scope of the APE project (Active Phasing Experiment), and will be installed on the Very Large Telescope (VLT). It will serve for two purposes: (1) as the sensor within the closed loop control of the mirror segments, and (2) as internal reference metrology to qualify the accuracy of different types of phasing cameras that will be developed and tested within the scope of the APE project. The sensor is based on the concept on instantaneous phase shifting, low-coherence, dual wavelength interferometry. By simultaneously acquiring four interferograms at phase shifts of 90° the system is inherently very insensitive to vibrations. Working at two wavelengths allows absolute distance measurements within the range of half the synthetic wavelength, i.e. in our case within a range of about 25 μm. The concept of low coherence interferometry avoids phase contributions of parasitic reflections and speckle effects. The low coherent light sources are two superluminescent diodes emitting at visible (red) wavelengths with coherence lengths in the range of 25 μm that can be increased by spectral filtering. Dual wavelengths measurements are performed at a rate of 20 Hz. The targeted accuracy is better than 5 nm rms (wavefront). The paper starts with a description of the system architecture. The different subsystems (light source, interferometer core with phase modulator and signal decoder, computer) are discussed. After having presented the optical design, the paper provides a closer look to the measurement and calibration algorithms. Finally, the paper presents the experimental setup and the "first fringes" obtained in the laboratory.