A proximity fuze (also called a VT fuze) is a fuze that is designed to detonate an explosive device automatically when the distance to target becomes smaller than a predetermined value or when the target passes through a given plane.
The concept originated with British researchers and was developed under the direction of physicist Merle A. Tuve at the The Johns Hopkins University Applied Physics Lab (APL). The fuze is considered one of the most important technological innovations of World War II. The advent of the proximity fuze contributed massively to the Allied victory in WW2. There are different sensing principles:
* radio frequency sensing
* optical sensing
* acoustic sensing
* magnetic sensing
* pressure sensing
Before the fuze's invention, detonation had to be induced either by direct contact, or a timer set at launch, or an altimeter. All of these have disadvantages. The probability of a direct hit with a relatively small moving target is low; to set a time- or height-triggered fuze one must measure the height of the target (or even predict the height of the target at the time one will be able to get a shell or missile in its neighbourhood). With a proximity fuze, all one has to worry about is getting a shell or missile on a trajectory that, at some time, will pass close by the target. This is still not a trivial task, but it is much easier to execute than previous methods.
Use of timing to produce air bursts against ground targets requires observers to provide information for adjusting the timing. This is not practical in many situations and is slow in any event. Proximity fuzes fitted to such weapons as artillery and mortar shells solve this problem by having a range of pre-set burst heights (e.g. 2, 4 or 10 metres) above ground, which can be selected by gun crews prior to firing.
The radio frequency proximity fuze concept was proposed to the British Air Defence Establishment in a May, 1940, memo from William A. S. Butement, Edward S. Shire, and Amherst F.H. Thompson. A breadboard circuit was constructed by the inventors and the concept was tested in the laboratory by moving a sheet of tin at various distances. Early field testing connected the circuit to a thyratron trigger operating a tower-mounted camera which photographed passing aircraft to determine distance of fuze function. Prototype fuzes were then constructed in June, 1940, and installed in unrotated projectiles (the British cover name for solid fuelled rockets) fired at targets supported by balloons. The details of these experiments were passed to the United States Naval Research Laboratory and National Defense Research Committee (NDRC) by the Tizard Mission in September, 1940, in accordance with an informal agreement between Winston Churchill and Franklin D. Roosevelt to exchange scientific information of potential military value.
Following receipt of details from the British, the experiments were successfully duplicated by Richard B. Roberts, Henry H. Porter, and Robert B. Brode under the direction of NDRC section T chairman Merle Tuve. Lloyd Berkner of Tuve's staff devised an improved fuze using separate tubes for transmission and reception. In December, 1940, Tuve invited Harry Diamond and Wilford S. Hinman, Jr, of the United States National Bureau of Standards (NBS) to investigate Berkner's improved fuze. The NBS team built six fuzes which were placed in air-dropped bombs and successfully tested over water on 6 May 1941.
Parallel NDRC work focused on anti-aircraft fuzes. Major problems included microphonic difficulties and tube failures attributed to vibration and acceleration in gun projectiles. The T-3 fuze had a 52 percent success against a water target when tested in January, 1942. The United States Navy accepted that failure rate and USS Cleveland (CL-55) tested proximity fuzed ammunition against drone aircraft targets over Chesapeake Bay in August 1942. The tests were so successful that all target drones were destroyed before testing was complete. Proximity fuzes promptly went into large scale production. A General Electric Christmas-tree lamp manufacturing facility in Cleveland, Ohio was modified to produce the tubes; and the fuzes were assembled at General Electric plants in Schenectady, New York and Bridgeport, Connecticut.
Vannevar Bush, head of the U.S. Office of Scientific Research and Development (OSRD) during this war, credited the proximity fuze with three significant effects.  It was important in defense from Japanese Kamikaze attacks in the Pacific. Bush estimated a seven-times increase in the effectiveness of 5 inch anti-aircraft artillery with this innovation. It was an important part of the radar-controlled anti-aircraft batteries that finally neutralized the German V-1 bomb attacks on England. Third, it was released for use in land warfare just before the Battle of the Bulge. It decimated German divisions caught in the open. The Germans felt safe from timed fire because they thought that the bad weather would prevent accurate observation. General Patton said that the introduction of the proximity fuze required a full revision of the tactics of land warfare.
 Radio frequency sensing
Radio frequency sensing is the main sensing principle for shells and this is mostly in mind when one speaks of "proximity fuzes".
The device described in the WWII patent works as follows: The shell contains a micro-transmitter which uses the shell body as an antenna and emits a continuous wave of roughly 180–220 MHz. As the shell approaches a reflecting object, an interference pattern is created. This pattern changes with shrinking distance: every half wavelength in distance (a half wavelength at this frequency is about 0.7 meters), the transmitter is in or out of resonance. This causes a small oscillation of the radiated power and consequently the oscillator supply current of about 200–800 Hz, the Doppler frequency. This signal is sent through a band pass filter, amplified, and triggers the detonation when it exceeds a given amplitude.
 Optical sensing
Optical sensing was developed in 1935, and patented in Great Britain in 1936, by a Swedish inventor, probably Edward W. Brandt, using a petoscope. It was first tested as a part of a detonation device for bombs that were to be dropped on bombers, part of the UK's Air Ministry's "bombs on bombers" concept. It was considered (and later patented by Brandt) for use with anti-aircraft missiles. It used then a toroidal lens, that concentrated all light out of a plane perpendicular to the missile's main axis onto a photo cell. When the cell current changed a certain amount in a certain time interval, the detonation was triggered.
Some modern air-to-air missiles make use of lasers. They project narrow beams of laser light perpendicular to the flight of the missile. As the missile cruises towards the target the laser energy simply beams out into space. However, as the missile passes its target some of the laser energy strikes the target and is reflected back towards the missile where detectors sense the reflected laser energy and trigger the missile warhead.
 Acoustic sensing
Acoustic sensing used a microphone in a missile. The characteristic frequency of an aircraft engine is filtered and triggers the detonation. This principle was applied in British experiments with bombs, anti-aircraft missiles, and airburst shells (circa 1939). Later it was applied in German anti-aircraft missiles, which were mostly still in development when the war ended.
The British used a Rochelle salt microphone and a piezoelectric device to trigger a relay to detonate the projectile or bomb's explosive.
Naval mines can also use acoustic sensing, with modern versions able to be programmed to "listen" for the signature of a specific ship.
 Magnetic sensing
Magnetic sensing can only be applied to detect huge masses of iron such as ships. It is used in mines and torpedoes. Fuzes of this type can be defeated by degaussing, using non-metal hulls for ships (especially minesweepers) or by magnetic induction loops fitted to aircraft or towed buoys.
 Pressure sensing
Some naval mines are able to detect the pressure wave of a ship passing overhead.
 VT and "Variable Time"
The designation "VT" is often said to refer to "variable time". Fuzed munitions before this invention were set to explode at a given time after firing, and an incorrect estimation of the flight time would see them explode too soon or too late. The VT fuze could be relied to explode at the right time—which might vary from that estimated.
However the term "VT" was coined simply because Section "V" of the Bureau of Ordnance was in charge of the programme and they allocated it the code-letter "T".
The idea that it stood for "variable time" was a happy coincidence that was supported as an intelligence smoke screen by the allies in WW2 to hide its true mechanism.