A miniaturized optical system based on spatial filtering for measuring speckle displacement will be discussed with special emphasis on shaping the speckle spectrum in order to enhance the signal. Applications for measuring linear object velocity - being it in one or two dimensions - and for probing angular velocities will be discussed. A miniaturized system has been developed for implementation in a single chip for measuring speckle displacement in two directions. The system is dedicated for cursor control and is in order to reduce cost based on the use of a single Vertical Cavity Surface Emitting Laser (VCSEL), a dedicated single-chip detector and signal processor and a molded polymer optical element performing the necessary optical processing.© (2006) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.