The correlation function between power-output and object displacement is analyzed theoretically by Gaussian electromagnetic beam approximation and characterize the dynamic range sensor 4 mm (with linear region 1 mm) and sensitivity is 55. Experiment shows that the. He-Ne laser (632. 8 nm) and OPT 101 (Burr Brown) detector is used to detect the change in power-output due to object displacement. Recently, high precision fiber displacement sensors have received significant attention for applications ranging from industrial to medical fields that include reverse engineering and micro-assembly (Laurence et al., 1998; Shimamoto & Tan ka. Central Research Institute of Building and Construction Co., MCC Group, Shenzhen, China 2.