Fig. 1 shows the circuit of the telephone line indicator. When the telephone is not in use (the handset is on hook), the line voltage is 48-60V. This voltage passes through the simple polarity guard built around the bridge rectifier comprising diodes D1 through D4 and fed to the remaining circuit. Zener diode ZD1 breaks down and transistor T1 conducts. As a result, transistor T2 does not conduct and LED1 does not glow, indicating that the line is not in use.
When the telephone line is in use (the handset is off-hook), the line voltage drops to a level below the zener voltage of ZD1. Transistor T1 cuts off and transistor T2 conducts. As a result, LED1 lights up to indicate a busy/in use/tap/misuse condition.
Assemble the circuit on a general-purpose PCB and enclose in a suitable cabinet. Refer Fig. 2 for the pin configuration of transistor MPSA42 and LED.