A vertical x-ray stepper has been developed for 0.2 mum synchrotron orbital radiation lithography. The key features of this prototype stepper are a new gap setting algorithm, an optical heterodyne alignment system, and a newly developed fine motion mask stage. Gap setting is executed so as to make the mask and wafer parallel to the travel plane of the wafer x-y stage so that only one gap setting per wafer is required. The gap setting accuracy between 20 and 50 mum gaps is better than +/- 1.5 mum (3sigma) for each exposure position. The optical heterodyne alignment signal obtained by detecting the diffraction beams from two checkerboard gratings has a detectable resolution of better than 0.01 mum and has only a small dependence of +/- 0.02 mum on gap variation. The alignment signals are fed back to the mask stage which can align the mask and wafer with a resolution of 5 nm. In exposure experiments, 0.15 mum lines and spaces were printed on a negative resist (SAL 601) and a 0.05 mum overlay accuracy has been obtained.