A key challenge for wireless sensor networks is minimizing the energy required for network nodes to communicate with each other, and this becomes acute for self-powered devices such as 'smart dust'. Optical communications is a potentially attractive solution for such devices. The University of Oxford is currently involved in a project to build optical wireless links to smart dust. Retro-reflectors combined with liquid crystal modulators can be integrated with the micro-machine to create a low power transceiver. When illuminated from a base station a modulated beam is returned, transmitting data. Data from the base station can be transmitted using modulation of the illuminating beam and a receiver at the micro-machine. In this paper we outline the energy consumption and link budget considerations in the design of such micro-machines, and report preliminary experimental results.© (2006) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.