Residual stresses are self-equilibrated stresses supported by a body in the absence of external loads. They play a significant role in the dimensional stability and mechanical performance of a composite structure. Optical fibre Bragg grating (FBG) sensors are excellent non-destructive tools for internal strain measurements in composite materials especially when are used simultaneously as reinforcement and sensor. In this study, long-gauge FBGs are introduced in single fibre cylindrical specimens of epoxy. The strain response of the fibre due to shrinkage of the epoxy during polymerisation is investigated using optical low-coherence reflectometry which provides a direct reconstruction of the axial strain field along the reinforcing optical fibre. In addition, Bragg wavelength distributions have been determined as functions of the depth of circumferential cracks in the radial direction of the specimen and normal to the fibre. These results are combined with a modified crack compliance method to obtain the radial dependence of the residual strains in the matrix. The experimental data are coupled with numerical simulations of an equivalent thermo-elastic matrix material to obtain the entire residual stress field in the epoxy. The disturbance of the residual stress field due to the presence of the fibre extends up to 4 fibre radii. The results at the center of the specimen, where end effects are negligible, match very well with a theoretical model of a fibre in an infinite matrix. The shear stress evolution at the entry point of the fibre is very well described by using a sufficiently refined radial mesh. The redistribution of the residual stresses due to the introduction of a longitudinal crack has also been investigated. The resulting axial stress relaxation is well below the one obtained with the transversal circular crack and no birefringence in the fibre is detected.