In this thesis work, a systematic quantitative study has been undertaken, on the performance of etched fiber Bragg Grating (FBG) sensors in the investigation of surface molecular adsorption in real-time; it is shown that the limit of detection (LOD) of FBGs etched below 2 microns diameter, is better compared to prominent optical label-free molecular sensing techniques such as Surface Plasmon Resonance (SPR). Novel fiber optic sensors based on FBG and etched FBG with various nano materials (polyelectrolytes, carbon nanotubes, hydrogel, metals and chalcogenides) coated on the surface of the core or cladding, have been proposed for sensing multi parameters such as pH, protein, humidity, gas, strain, temperature, and light etc. Besides being reproducible and repeatable, the proposed methods are fast, compact, and highly sensitive. A novel optical instrument has also been developed to measure angular deviation, binocular deviation and refractive index of glass slabs, and liquids, based on a shadow casting technique. This method uses the deviation in the geometrical shadow cast by a periodic dot pattern trans-illuminated by a distorted light beam from the transparent test specimen relative to a reference pattern.