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The aim of this paper is to present a novel indoor positioning system which is based on a unique idea. The proposed positioning system provides an alternative to currently existing positioning system. A new idea of optical sensing has been applied that in combination with specific analogue preprocessing and digital signal processing techniques is capable to determine the position and the orientation of objects equipped with special markers. The method is based on moving a pinhole between a marker and the photodiode on the detector. A prototype realization is also outlined, and experimental results are presented to confirm the applicability of the method.