Temperature gauge up and down like a yo yo

[vince70]

I wonder if someone can help,
I have an audi 80 2.3 and the other week I put my heater on and noticed the water dropped in the expansion tank by about a litre so I refilled it with anti freeze and all was well.
Today I warmed the car up and all was well then when I put my heater on my temperature when back down to 0%.
I was thinking maybe an airlock or maybe a new thermostat, I put my heater on full hot and undid the bleed screw on the pipe which goes into the heater matrix but nothing came out.
Also I notice when I undo the expansion tank the level goes up a touch but don't know if this is related.
Any ideas would be much appreciated.

[Doctle Odd]

Is the heater working? If so suspect the coolant temperature sensor