Understanding of the space debris environment and accuracy of its observation-validated models are essential for optimal design and safe operation of satellite systems. Existing ground-based optical telescopes and radars are not capable of observing debris smaller than several millimeters in size. A new experimental and instrumental approach – the space-based Local Orbital Debris Environment (LODE) detector – aims at in situ measuring of debris with sizes from 0.2–10mm near the satellite orbit. The LODE concept relies on a passive optical photon-counting time-tagging imaging system detecting solar photons (in the visible spectral range) reflected by debris crossing the sensor field of view. In contrast, prior feasibility studies of space-based optical sensors considered frame detectors in the focal plane. The article describes the new experimental concept, discusses top-level system parameters and design tradeoffs, outlines an approach to identifying and extracting rare debris detection events from the background, and presents an example of performance characteristics of a LODE sensor with a 6-cm diameter aperture. The article concludes with a discussion of possible sensor applications on satellites.