Permanent reservoir monitoring (PRM) is an emerging market with significant potential in the oil and gas industrials, where data from several thousand pressure and acceleration sensors are used to monitor the condition of an underground hydrocarbon reservoir. Fibre-optic sensor arrays offer significant potential benefits, and highly efficient multiplexing and telemetry architectures can combine the several thousand sensors onto just a few fibres, the fewer the better. This study presents a novel, high performance interferometric fibre-optic sensor array using a distributed erbium doped fibre amplifier (EDFA) within a hybrid time and wavelength division multiplexed (TDM/DWDM) architecture, to reduce the multiplexing loss and to increase the number of sensors per fibre pair. The performance of the new heavily multiplexed sensor array is characterised, both theoretically and experimentally, which demonstrates its significant advantages in multiplexing level, insertion loss and interconnecting fibre count compared with the previous state of the art. The amplification behaviour of a single stage EDFA is first modelled. The key properties of the doped fibre are validated by experimental comparison with simulations. This allows definition of general design guidelines for interferometric multiplexed sensor systems incorporating a distributed EDFA. The author also presents an analytical approach to accurately model the phase sensitivity in such systems. The model incorporates the various key noise contributions and also defines a novel term ‘Demod phase sensitivity’ to take into account the effects of noise aliasing in TDM based architectures. Furthermore, the author configures and characterizes sensor networks of increasing scale: 1) a 4-wavelength sensor network, 2) 16-wavelength sensor networks with 4 active, and 12 idle channels, 3) a 16-wavelength sensor network with real TDM groups, 4) 16 TDMx16 WDM and 64 TDMx16 WDM sensor networks, and finally a study of crosstalk effects is presented. Both the simulation and experimental results show that, the network can address up to 64×16 sensors, along one single fibre pair, and can support up to 256x16 within an acceptable phase sensitivity for many applications. This work provides a novel, efficient and low-cost sensor array design to meet the significant demands of the current commercial PRM market. Keywords: Large scale fibre-optic sensor array, hybrid TDM/DWDM, distributed EDFA, phase sensitivity, crosstalk, PRM.