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Summary form only given. For a space-based water vapor differential absorption lidar (DIAL) system there is a need for improved optical receiver filters especially for daytime operation to reject background radiation on the detector. Present dielectric interference filters have transmission bandwidths of approximately 1 nm and are not tunable. To achieve good system performance the daytime filter bandwidth should be 10 pm a factor of about 100 narrower than interference filters. Unless a better filter can be found, future space based DIAL systems may only be able to operate at night. Fortunately a new technology has emerged that could allow very narrow bandwidth filters to be made in optical fibers. These Bragg gratings have been applied to the communications industry at the 1.55-micron wavelength, but there is evidence that the same technology will work at the 946 nm wavelength of interest to water vapor DIAL receivers. The paper discuss research on the testing of a new optical receiver using an ultra-narrow fiber Bragg grating optical filter at 946 nm for potential use on space borne lidar.