This project deals with the design and development of an optoelectronic sensor system and its possible use in online applications. There are two different configurations of this sensor a sensor for surface roughness and another for defect detection. In each configuration the mechanical and optical design are almost identical - optical fibres convey light to and from a surface Light source driving circuits and photodetection circuits were developed for each sensor Data acquisition and analysis algorithms were developed for each sensor. The defect sensor detects through holes and blind holes in sample plates of the following materials brass, copper, stainless steel, and polycarbonate Edge detection is achieved through the development of a photoelectric sensor system that senses the proximity of a surface within a certain displacement range using a multimode laser diode light source emitting at 1300 nm. This sensor uses a voltage cut-off system to avoid the effects of light source intensity variation, vibration, surface roughness and other causes of variable reflectivity in online measurement of engineering surfaces. The through holes had 2 mm diameter and the blind holes had 3 mm diameter and a depth of 0 6 mm. A spatial resolution of approximately 100 (Jim was achieved - the diameter of the collecting fibre’s core. Surface roughness is estimated between 0 025 \im and 0 8 \im, average surface roughness, through a light scattering technique Specular reflectivity was measured at incident angles of 45° and 60°. The causes of error, noise and drift are investigated for this system and recommendations are made to account for these problems. A carrier frequency system using an electronically modulated LED light source was implemented to improve the noise rejection of the system Digital signal processing system was implemented to digitally filter the acquired signal.