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Whenever I make or receive calls, my screen doesn't lock and is forever flashing. I also inadvertantly put callers on hold or mute without realising. Is there a fault with my phone's sensor or is there a way to lock the screen during calls. I read that the phone should automatically lock the screen when it senses it is close to the face.... thanks
Did you try to run the proximity sensor test to check if it is an issue with the sensor, in Settings > Support > Xperia tests?
Do test the proximity sensor as suggested by @Jess.09 , keep in mind that if the proximity sensor it's not in "contact/close proximity" with your face/ear, it won't lock the screen.