A sensor system monitors deflection of turbine blades of a wind turbine. The system includes a first component configured on the turbine blades. A second component is configured on the tower at a height so as to detect the presence of the first component as the blades rotate past the tower. The second component generates a corresponding measurable parameter or value that is indicative of distance between the blades and tower. The second component is disposed substantially completely around the circumference of the tower so as to detect the first components at any rotational position of the turbine nacelle relative to the tower.