The basic principle and realizing method of polarization diversity receivers to eliminate polarization-induced fading in fiber optic interferometers are studied. Theoretical analysis shows that bi-state polarization diversity receiver can reduce polarization-induced fading. The optical fiber sensing system is built to test the bi-state polarization diversity receiver technique, with the minimum visibility of 0 at single way and 0.4 at bi-state polarization diversity receiver. The result shows that phase carrier demodulation technology adopted by the system can realize stable detection of the signal.