Soft robots could bring robotic systems to new horizons, by enabling safe human-machine interaction. For precise control, these soft structures require high level position feedback that is not easily achieved through conventional one-degree-of-freedom (DOF) sensing apparatus. In this paper, a soft two-DOF dielectric elastomer (DE) sensor is specifically designed to provide accurate position feedback for a soft polymer robotic manipulator. The technology is exemplified on a soft robot intended for MRI-guided prostate interventions. DEs are chosen for their major advantages of softness, high strains, low cost and embedded multiple-DOF sensing capability, providing excellent system integration. A geometrical model of the proposed DE sensor is developed and compared to experimental results in order to understand sensor mechanics. Using a differential measurement approach, a handmade prototype provided linear sensory behavior and 0.2 mm accuracy on two-DOF. This correlates to a 0.7\% error over the sensor's 30 mm x 30 mm planar range, demonstrating the outstanding potential of DE technology for accurate multi-DOF position sensing.