A simple optical position encoder of detecting the position of a light spot generated by any light source of either light generating or light reflecting type, directly in a binary or other encoded format at very high speed, comprises a diffractive optical element including an array of diffractive cells each being formed by a unique arrangement of diffractive sub-cells and being disposed at a predetermined position with respect to a predetermined reference point on the diffractive optical element. Each cell is capable of generating a unique optical diffraction pattern when illuminated. When an image of the light spot is formed on the diffractive element, at least one cell is positioned to receive the light spot input image, generating its unique optical diffraction pattern accordingly at an output image plane, where one or more optical detectors are disposed. The detectors are responsive to the unique optical diffraction pattern to generate one or more encoded signals indicative of the position of the light spot image with respect to said reference point. Described applications of the basic embodiment of the position encoder includes absolute three-dimensional position measurement of a light spot formed on a object, position encoding of a light peak generated by an optical processor or correlator and absolute/relative position detection of a light spot generated by or reflected onto an object in a two-dimensional coordinates system.