A system or method for controlling a multiple cylinder internal combustion engine operable in a reduced displacement mode with at least one valve or cylinder selectively deactivated include monitoring valve operation by analyzing camshaft position to detect valve operation inconsistent with a current cylinder state (activated or deactivated) and controlling the engine in response to detecting the inconsistent operation. The camshaft position may be used to produce a surrogate signal indicative of intake/exhaust valve lift generated using camshaft sensor tooth deviation relative to an expected or reference tooth position for a corresponding crankshaft position and compared to a corresponding threshold. The surrogate signal indicative of valve lift may also be generated by pattern matching or correlation of one or more reference tooth position patterns to a measured or inferred tooth position pattern.