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The intensity-dependent transmission characteristics of an Ag^+&harr;Na^+ ion-exchanged glass waveguide with a nematic liquid crystal MBBA cover have been investigated experimentally using an Ar^+ laser. It is found that the transmission characteristics of the TE_1 mode are strongly influenced by temperature. Optical bistability has been observed at a particular temperature. Such the strong temperature dependence is believed to be brought by an increase in ordinary refractive index of the MBBA cover due to temperature rise.