There is provided a system and a method for determining an in-band noise parameter representative of the optical noise contribution (such as OSNR) on a polarization-multiplexed optical Signal-Under-Test (SUT) comprising two polarized phase-modulated data-carrying contributions and an optical noise contribution. For each of a multiplicity of distinct polarization-analyzer conditions, the SUT is analyzed to provide at least one polarization-analyzed component of the SUT and the polarization-analyzed component is detected with an electronic bandwidth at least ten times smaller than the symbol rate of the SUT to obtain a corresponding acquired electrical signal; for each acquired electrical signal, a value of a statistical parameter is determined from the ac component of the acquired electrical signal, thereby providing a set of statistical-parameter values corresponding to the multiplicity of distinct polarization-analyzer conditions; and, from the set of statistical-parameter values, the in-band noise parameter is mathematically determined.