We present a closed-loop technique for measuring wavelength shifts associated with fiber Bragg gratings by using a fused biconical wavelength division multiplexer (WDM). The spectral response of the WDM is actively tuned by stretching of the coupling region to maintain a fixed coupling ratio at the reflected Bragg wavelength. The closed-loop operation allows sensitivities usually associated with a highly selective WDM to be obtained without compromising the measurement range. A simple theoretical model is presented together with experimental results for temperature and strain measurements.