This paper presents a highly compact fibre-optic system based on light intensity modulation for multi-segment flex sensing in pliable robot arms, e.g., articulated surgical instruments. This fibre-optic arrangement is 7.5 mm in diameter and is comprised of a two-segment flexible and stretchable Steiner chain arm section with twelve housings at the distal side which accommodates passive cables. The displacement of each cable will be used to determine the bending. This Steiner chain section is followed by a basal rigid fibre-optic sensing unit integrated with a low-friction retractable distance modulation array which couples the motion of the passive cables with light-emitting optical fibres. The low-friction retractable distance modulation array uses steel spring-needle double sliders to reduce the hysteresis and to recover reference sensor values when the arm returns to its original straight configuration. The U-shape loopback design of the optical fibres allows integration of all electronics away from the sensing site. The experimental results indicate a maximum bending angle error of 6° in one individual segment of the two-segment arm with respect to reference angle values calculated from camera images.