This paper presents properties of all-optical bistable fibre switch using two fibre Bragg gratings and rare earth elements doped optical fiber. It is not possible to obtain bistable properties at low switching power level in case of a single fibre grating. In this article the method of optical switching that uses all-optical switch has been proposed. It has been achieved by varying the refractive index of nonlinear optical material as a result of light signal amplitude changes. Presented optical bistable device can be used both in contemporary optically switched networks as well as in optoelectronic sensors, owing to their high achievable resolution.