In this thesis the study of a multiplexed Fibre Optic Acoustic Sensor (FOAS) system is presented. Narrowband reflectors (Fibre Bragg Gratings or FBGs) define sensing sections of 12.5 metres, which then act as Fabry-Perot (FP) cavities. Low-coherence interferometry is used to interrogate the sensors with an accuracy of 50 µrad/√Hz, in good agreement with the theoretically predicted value. Heterodyne signal processing is used to eliminate low frequency environmental noise. The performance of the sensor is checked by a sinusoidal calibration signal generated by a PZT fibre stretcher. The sensor has a flat frequency response at 10 kHz with a high sensitivity of 50 µrad/√Hz and a dynamic range of 80 dB. The use of FBG based interferometers allows the use of Wavelength Division Multiplexing (WDM) technology allowing us to multiplex large number of sensors in the system. The sensing system uses Amplified Spontaneous Emission (ASE) sources for illumination purposes. ASE sources are an attractive option for interrogating arrays of FBG sensors. The coherence features of broadband ASE light makes it attractive to be used in sensing applications, since Coherence Multiplexed (CM) systems interrogated with these sources do not suffer from phase induced intensity noise, which is a problem when employing laser sources. It is well known that ASE sources suffer from excess photon noise, which is the dominant type of noise and hence limits the systems sensitivity. To get an idea of the impact of this type of noise on the performance of the system, the noise properties have been studied in detail both theoretically and experimentally. Noise spectra are calculated from the autocorrelation function of the output detector current for a thermal-like source. It is well known that unbalanced interferometers (with delay time T) act as filtering elements and produce a noise spectrum with peaks at integer multiples of 1/T, due to filtered source intensity noise. The noise analysis is used to evaluate the performance of the sensor system, and to calculate the optimum reflectivity of both FBGs in the FP sensing cavity. Optimum reflectivities for both FBGs in the FP sensors have been found. Theoretical calculations show that the best phase resolution and visibility is obtained for R1 = 40 % and R2 = 100 %. This has been verified with experiments. We also established the robustness of the system to FBG drift. A first demonstration of a FOS interrogation system using a low-coherence ASE source with a Semiconductor Optical Amplifier (SOA) is presented. The SOA is Gain-Saturated and thereby reduces the dominant intensity noise originating from the ASE source, improving the systems Signal to Noise Ratio (SNR).