The aim of this research was to maintain the interacting liquid level and temperature parameter values at the desired level. The design of decoupling and linearization algorithm (Hirschom's algorithm) and soft sensor techniques for an approximated model of an interacting thermal non-linear process is presented in this work. First the nonlinear interacting system was converted into linear non interacting system using decoupling and linearization algorithm. The soft sensor techniques such as the Kalman observer and the Unknown Input Observer (UIO) was then applied to estimate the system parameters namely level and temperature for a non interacting linear MIMO system. The obtained estimated error for the plant using UIO observer was less when compared to Kalman observer. © 2012 Asian Network for Scientific Information.