This Thesis investigates the damage sensing capabilities of the electrical potential measurement technique in carbon fibre reinforced polymer composites. Impact damage was introduced in multidirectional laminates and its effect on potential distribution studied. It was found that delaminations and fibre breakages within the laminate can be detected and located by measuring potential changes on the external composite surface. The extent and size of potential changes were significantly affected by the position of the current electrodes in relation to the potential measurement probes. A numerical model was developed investigating the effect of different size delaminations, located in various positions within the lamina, on electrical potential distributions on the external ply, and a quantitative analysis of the numerical results is presented. The numerical simulations demonstrated that the measured potential changes on the external ply were in proportion to the delamination size. The numerical and experimental results were compared and the optimum configuration of current electrodes and potential probes for damage detection selected. The response of electrical potential to mechanical strain, in unidirectional and multidirectional samples was also investigated. It was found that the conductive medium, used for introducing the current, defines the piezo-resistance performance of the composite. A finite element model was developed able to predict the effect of inhomogeneous current introduction in unidirectional specimens on electrical potential and piezo-resistance. The effects of temperature and water absorption on potential measurements were also presented.