The Gravity Recovery and Climate Experiment (GRACE) is one of the present missions to map the Earth's gravity field. The aim of a GRACE follow-on mission is to map the gravitational field of the Earth with higher resolution over at least 6 years. This should lead to a deeper insight into geophysical processes of the Earth's system. One suggested detector for this purpose consists of two identical spacecraft carrying drag-free test masses in a low Earth orbit at an altitude of the order of 300 km, following each other with a distance on the order of 50 to 100 km. Changes in the Earth's gravity field will induce distance fluctuations between two test masses on separate spacecraft. These variations in the frequency range 1 to 100 mHz are to be monitored by a laser interferometer with nanometer precision. We present preliminary results of a heterodyne interferometer configuration using polarising optics, demonstrating the required phase sensitivity. © 2009 IOP Publishing Ltd.