We report a novel self-referenced diffraction-based leaky waveguide (LW) comprising a thin (~2 µm) film of a photofunctionalisable hydrogel created by covalent attachment of a biotinylated photocleavable linker to chitosan. Streptavidin attached to the chitosan via the photocleavable linker was selectively removed by shining 365 nm light through a photomask to create an array of strips with high and low loading of the protein, which served as sensor and reference regions respectively. The differential measurements between sensor and reference regions were used for measuring analytes (i.e., biotin protein A and IgG) while reducing environmental and non-specific effects. These include changes in temperature and sample composition caused by non-adsorbing and adsorbing species, leading to reduction in effects by ~98%, ~99%, and ~97% respectively compared to the absolute measurements. The novelty of this work lies in combining photofunctionalisable hydrogels with diffraction-based LWs for referencing. This is needed to realise the full potential of label-free optical biosensors to measure analyte concentrations in real samples that are complex mixtures, and to allow for sample analysis outside of laboratories where drifts and fluctuations in temperature are observed.