A dual stage, closed loop and self scanning algoritFin has been proposed for precise determination of optical constants i.e., refractive index, 'n', and absorption Index, 'k ' , together with thickness ' of thin film coatings . In the first stage , refractive index solutics over a knc.zn range are generated for a given set of nasured paranters , nanely, reflectance , R and trannittance , T, and preset thickness of the coating , where as in the seccd stage a merit function, defined in terms of mean square of the difference between refractive index values at consecutive wavelengths, is miriimised with respect to thickness. It is seen that while the algorithn can estimate the 'n ' , ' and ' d ' to an accuracy better than 0.005, 0.002 and 5/50 A0 (5 A0 for visible region coatings and 50 A0 for infrared coatings ) for an experinntal error of +0 . 005 in R arid T and it is able to overccme the ambiguity of ns.iltiple solutions, inherent in the existing methods.Apart from this, the required data can be generated faster, dispensing the cunbersane and expensive graphic systems. The algoritFin has been successfully appi ied to determine the optical constants of absorbing and transparent films.