This new sensor design provides good volume sensitivity (around 1600 nm/RIU) via collinear diffraction by the asymmetric grating placed in the waveguide vicinity. It provides the mode transformation between the fundamental TE0and the first TE1modes of the silicon wire (0.22 μm by a 0.580 μm cross-section) in the water environment. In order to provide the wavelength interrogation with a better extinction ratio for the measuring signal, the grating design is incorporated with the mode filter/demultiplexer. It selects, by the compact directional coupler (maximum 4 μm wide and 14 μm long), only the first guided mode (close to the cutoff) and transmits it with small excess loss (about −0.5 dB) to the fundamental TE0mode of the neighboring single mode silicon wire, having variable curvature and width ranging from 0.26 μm to 0.45 μm. At the same time, the parasitic crosstalk of the input TE0mode is below −42 dB, and that provides the option of simple and accurate wavelength sensor interrogation. The environment index is measured by the spectral peak position of the transmitted TE0mode power in the output single mode silicon wire waveguide of the directional coupler. This type of optical sensor is of high sensitivity (iLOD~ 2.1 × 10−4RIU for taking into account the water absorption at 1550 nm) and could be manufactured by modern technology and a single-step etching process.