A first grating is formed on a main scale, and a second and third gratings on an index scale. The first grating generally assumes a cruciform shape, and consists of a grating having grating lines arranged in the X-direction and another grating having grating lines arranged in the Y-direction. The second grating is formed in a square central area of the index scale, and consists of two gratings having grating lines arranged in the X-direction and divided at the center and another two gratings having grating lines arranged in the Y-direction and divided at the center. The third grating consists of four gratings having grating lines arranged in the X-direction with different phases and another four gratings having grating lines arranged in the Y-direction with different phases. A light-emitting element and eight photodetectors that are arranged corresponding to the respective gratings of the third grating are fixed to a movable member on which the index scale is attached. Light emitted from the light-emitting element passes though the second grating, reflected by the first grating, passes through the third grating, and finally detected by the photodetectors. Alternatively, the first grating may consist of rectangular portions arranged in the X- and Y-direction in a matrix form.