This paper presents a systematic investigation on the design and development of a four-sensor probe system to be used for air-water multiphase flow measurements. A mathematical model is presented which can be used to determine the optimum axial separation of the front sensor with respect to three rear sensors within a four sensor probe system. This system can be used to measure flow properties of the dispersed phase in bubbly air-water flows accurately. Paper also presents a sensitivity analysis to determine the minimum sampling frequency requirements in the data collection process, so that associated errors in various output parameters can be minimized, for the given values of sensors co-ordinates. A particularly novel feature of this paper is development of a unique digital signal processing scheme to enable the accurate computation of different flow characteristics. This paper also presents validation of four-sensor probe measurements from a flow visualization and measurement system which relies on using two high speed cameras mounted orthogonally. The results obtained from validation experiments show very high degree of similarity in measured flow variables from the two systems. This indicates that the four-sensor probe system developed in this study can be used with confidence to measure parameters of a dispersed multiphase flow. The flow characteristics obtained from the four-sensor probe system when used in a multiphase flow system are also presented. The results indicate a unique flow pattern corresponding to bubbles of different sizes in air-water flows.