Composite materials are vulnerable to damage, and this can result in conservatism in design and increased maintenance costs. One way of reducing these costs is by integrating a system into the composite material which can sense the damage condition and provide cm assessment of its size, location and significance. This is a difficult task, and one of the main challenges is to develop sensor systems that can detect damage reliably while not compromising the material properties of the composite or significantly increasing its weight. A sensor system will be described which fulfils some of these requirements. It is based on the use of a highly birefringent optical fibre. The whole length of the fibre is used as the sensor, which minimises additional weight. It also enables information to be obtained on the position of the damage along its length. The mechanical properties of the composite material are not degraded when the fibre is embedded,as long as some simple precautions are taken. The sensor utilizes the propagation of low coherence polarised light in highly birefringent optical fibre. Light is launched into one of the polarisation states of the fibre and is coupled into the orthogonal state in the presence of damage. The sensor is interrogated interferometrically. Its operation will be described in detail and results will be presented which illustrate its performance in detecting impact induced damage in a number of different composite material systems. Benefits of the system will be described. together with areas which need further development.