A Laboratory experiment has been conducted to establish relation between absolute percent reflectance as measured by Exotech spectro-radiometer compatible to LANDSAT MSS and corresponding known sediment concentrations in a specially designed laboratory sedimentation tank under known illumination conditions. Sediment samples are collected from the bed load deposits of JAYAKWADI reservoir by using a bed load sampler and are analysed in the laboratory for their particle size distribution. Sediment concentrations in the range of 50–1100 mg/l are used in the experiment. A multiple linear regression equation has been developed between absolute percent reflectance and sediment concentration. The results indicate that diffused absolute reflectance from water volume increases with increased sediment concentration and separability between bands is higher at higher concentrations. Exotech band 2 provides significant response from suspended sediment concentrations. There is almost one to one correspondence between predicted (from the model) suspended sediment concentrations and actual concentrations with a coefficient of determination of 0.962 and a standard eror of estimate of 56.47 mg/l. This may be due to the fact that most of the noise sources are nearly eliminated in the controlled laboratory experiment.