Phosphate glasses having compositions (59.5-x)P_2O_5-40MgO-xAgCl-0.5Er_2O_3, where x=0, 1.5 mol.% is prepared using melt-quenching technique. Infrared, absorption and photoluminescence spectra of Er^{3+}-doped magnesium phosphate glasses have been reported. The amorphous nature of the host glass is confirmed by X-ray diffraction technique. Transmission electron microscope image confirms the existence of silver nanoparticles inside the glass matrix. The localized surface plasmon resonance band of silver is found to be located around ≈ 528 nm for the Er^{3+} free sample. A frequency upconversion process from infrared to visible is observed on excitation with 797 nm radiation. Furthermore, an enhancement in the emission at 540 nm and 632 nm is found due to the local field effect of silver nanoparticles. Our findings may contribute towards the development of solid state laser and sensors.
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