A blade positioning system and method are provided to dynamically measure blade position during flight of a rotorcraft. In the context of a method, a blade of the rotorcraft is repeatedly illuminated by a light source during flight of the rotorcraft while the blade is rotating. The method also includes detecting radiation scattered from the blade in response to illumination of the blade. The method further includes determining at least one of a blade pitch angle, a blade flap angle, a blade leading position or a blade lagging position based upon the radiation that is scattered from the blade and detected. A rotorcraft is also provided that includes a chip-scale light detection and ranging (LIDAR) sensor configured to illuminate the plurality of blades while the blades are rotating in order to permit blade position to be measured or to illuminate terrain beneath the rotorcraft in order to provide an altitude measurement.