The ability to non-invasively detect early disease is a boon to the patients as well as the medical professionals. Diffuse reflectance spectroscopy can provide quantitative biochemical and morphological information for tissue characterization. The diffuse reflectance data is influenced by the functional state of matter, which affects the optical properties. White light is used to measure these changes in optical properties which in turn give an idea about the region under scan. Optical imaging has been gaining importance especially in medical field. An optical fibre spectrometer is set up to obtain the reflectance data. Reflectance probe is mounted on a movable mechanism with two degrees of freedom which is controlled by a Programmable Logic Control (PLC) unit. PLC unit contains Human-Machine interface (HMI) to feed in manually the dimension of the area to be scanned, scan speed (thereby resolution) with which scanner arm is to be moved. This automation could avoid overlapping of data during scanning. Codes are written in MATLAB to display the direct reflected intensity images, functional images and multispectral images. The reflected intensity images give the structural details of the region under scan. The functional imaging enables to measure the physiological changes (change in molar concentrations of oxy-hemoglobin, deoxy-hemoglobin and oxygenation state) in tissue under diseased conditions. The multispectral imaging helps to visualize the changes in the optical properties of tissues at any particular wavelength underneath the region of scan in turn, aiding in disease diagnosis. The unique information obtained from the diffuse reflectance spectroscopy makes it suitable for a variety of clinical applications. This method helps us realize the characteristics of non-invasiveness, combined with speed, accuracy and repeatability in the process of diagnosis of various skin diseases. Optical techniques have the potential for performing in vivo diagnosis on tissue without the need for sample excision and processing.