The disclosure relates to a plasmon resonance-based method for H2 sensing in a gas stream utilizing a hydrogen sensing material. The hydrogen sensing material is comprises Pd-based or Pt-based nanoparticles having an average nanoparticle diameter of less than about 100 nanometers dispersed in an inert matrix having a bandgap greater than or equal to 5 eV, and an oxygen ion conductivity less than approximately 10−7 S/cm at a temperature of 700° C. Exemplary inert matrix materials include SiO2, Al2O3, and Si3N4 as well as modifications to modify the effective refractive indices through combinations and/or doping of such materials. The hydrogen sensing material utilized in the method of this disclosure may be prepared using means known in the art for the production of nanoparticles dispersed within a supporting matrix including sol-gel based wet chemistry techniques, impregnation techniques, implantation techniques, sputtering techniques, and others.