  Displacement measuring interferometry is a crucial component in metrology
applications. In this paper, we propose a fiber-based two-wavelength heterodyne
interferometer as a compact and highly sensitive displacement sensor that can
be used in inertial sensing applications. In the proposed design, two
individual heterodyne interferometers are constructed using two different
wavelengths, 1064 nm and 1055 nm; one of which measures the target displacement
and the other monitors the common-mode noise in the fiber system. A
narrow-bandwidth spectral filter separates the beam paths of the two
interferometers, which are highly common and provide a high rejection ratio to
the environmental noise. The preliminary test shows a sensitivity floor of
7.5pm/rtHz at 1Hz when tested in an enclosed chamber. We also investigated the
effects of periodic errors due to imperfect spectral separation on the
displacement measurement and propose algorithms to mitigate these effects.
