A lithographic apparatus is provided with an optical encoder measurement system having an irradiation system to direct an irradiation beam to a first scale. The system has optics to direct a primary diffracted beam diffracted from the first scale upon irradiation by the irradiation beam to a second scale and a detector to detect a secondary diffracted beam after interference and a second diffraction of the primary diffracted irradiation beam on the second scale to measure the position of the first scale with respect to the second scale.