A new dilatometry method has been developed for studying small cylindrical powder compacts based on non-contact white light interferometry which offers a z resolution of <10 nm. In-situ compact dimensions were measured as a function of time with controlled relative humidity and temperature, allowing the study of recrystallization and other volumetric changes for amorphous lactose compacts. Complementary X-ray powder diffraction and dynamic vapor sorption data confirmed both water sorption and recrystallization kinetics. At 35% RH the compacts exhibited 0.6% height expansion consistent with vapor sorption in a glassy material. For 55% RH and 75% RH, small initial shrinkages (similar to 2.5%) associated with the moisture induced plasticization of the lactose particles and their relaxation or collapse were observed, followed by a significant height expansion (similar to 15%) of the compacts due to swelling of the rubbery lactose phase prior to crystallization. The kinetics at 55% and 75% RH indicated a smooth dimensional transition from water swollen to crystalline lactose compacts. A detailed surface area study by N-2 BET adsorption of a range of compacts showed no statistically significant surface area changes above or below the T-g. (C) 2012 Elsevier B.V. All rights reserved.