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A method for precision small-angle measurement is proposed. This method is based on the total-internal-reflection effect of a light beam at a pair of glass prisms. Angular displacement of the light beam is measured when the intensity change of the reflected beam is detected as a result of the relative phase shift between the s- and the p-polarized beams. An initial phase shift between the s- and the p-polarized components is introduced to increase measurement sensitivity. For increased measurement linearity and reduced effect of laser power fluctuation on the output, a differential method is used in which the light beam is split equally into two beams, each reflected at a prism and detected by a photodiode. The output is obtained as the difference of the two detected intensities divided by their sum. A prototype device was built, which demonstrated a nonlinearity error of 1.3% in a measurement range of [+ or -] 0.6 [degrees] or 0.4% in [+ or -] 0.3 [degrees]. The peak-to-peak noise level was found to be at approximately 0.5 arc sec. This noise level can be reduced further and resolution increased by a reduction of the measurement range. [C] 2001 Optical Society of America OCIS codes: 120.0120, 120.3930, 120.3940, 120.5700, 260.3160, 260.5430, 260.6970.