Consider a diagonal action of $\mathbb Z_n$ on $\mathbb C^2$ generated by $(z_1,z_2)\to (\mu^pz_1,\mu^qz_2)$, with $\mu^n=1$.
Question. Is it always possible to find a smooth blow up $X\to \mathbb C^2$ such that the $\mathbb Z_n$-action lifts to $X$ and such that $X/\mathbb Z_n$ is smooth as well?
The same question can be asked for action of any finite group $G$ on any smooth variety (but I am especially interested in the above example).