In this paper an innovative spring-shaped fiber-optic displacement sensor (SSFODS) based on optical time domain reflectometer (OTDR) technology with simple construction and cheap cost was proposed for subgrade settlement monitoring. The sensor incorporated a simple spring-shaped fiber bending modulation that increased its sensitivity in bending, light source and detector. The sensing principle between the measured external displacement and bending loss of optical fiber was theoretically explained and its expression was also derived. Sensor calibration was conducted, which showed that the SSFODS was characterized by a large measurement range of 90 mm, minimum displacement resolution of 0.173 mm, maximum hysteresis error of 2.81% and maximum repeatability error of 8.42%, respectively. A soil drainage model test with the SSFODS was performed to study its performance in determining compression deformation of the soil. At last, a simple field monitoring application with two SSFODSs connected in series was conducted and the progressive compaction behavior of the fill slope was accurately captured by two SSFODSs. Additionally, it is possible to connect these SSFODSs in series on one optical link to realize quasi-distributed sensing monitoring. This capability supports a promising application of the sensor in geotechnical engineering for real-time monitoring of the stability of fill slopes, foundation pits and so on.