This feasibility study demonstrates, through modelling and simulation, that a Versatile Atmospheric Laser Doppler Instrument (VALDI), based on a single Fizeau interferometer and imaging detector, has the potential for precise, high-sensitivity, simultaneous measurements of wind speeds, temperature and atmospheric scattering ratio (ASR). In simple principle, the linear frequency dispersion of the Fizeau interferometer creates in the fringe plane an extended spectrum of atmospheric scattering. This is made up of broadband molecular scattering resulting in a Rayleigh-Brillouin spectral component of ≈4 GHz full width at half maximum (at 355 nm wavelength), and a narrow band spectral component originating from aerosol (Mie) scattering with spectral characteristics defined by the laser source and Fizeau design parameters. For the present investigation, a 16 channel detector, similar to those employed in ESA’s Aeolus spaceborne lidar is considered, together with an adapted Fizeau interferometer of specifications (plate separation, wedge angle, finesse, etc.) well within current practice. Extensive modelling and simulation demonstrates that the 16 detector channels of spectral information provide versatile, high sensitivity operation, for widely varying atmospheric scattering and attenuation conditions throughout the troposphere and lower stratosphere. Drawing on operational data and experience of the ESA Aeolus spaceborne lidar systems, simulations indicate that a spaceborne VALDI could achieve wind speed uncertainties <em>σ<sub>v</sub></em><sub>HLOS</sub> in the range of ±1.4 m s<sup>−1</sup> to ±3.2 m s<sup>−1</sup>, from the aerosol signal in central detector channels (with ASR ≈ 2 and 12 km observational path). The outer channels, dominated by molecular signal, should give wind speed uncertainties between ±2.4 m s<sup>−1</sup> and ±3.4 m s<sup>−1</sup> (for 87 km observation path length). It is further shown that fast analytical ratio techniques provide Doppler frequency analysis with accuracy approaching the Cramér-Rao ultimate quantum limit within 10 % to 20 %. Finally, questions of practical design, construction and operation are considered. In this regard the single interferometer and detector, with single optical delivery train, offers considerable advantages of optical simplicity, high signal throughput efficiency, robustness and good long term alignment control and stability, plus wide frequency/wind speed capability extending well above 100 m s<sup>−1</sup>.