Polycrystalline diamond films were deposited on (100) silicon substrates at 700 degrees C by oxy-acetylene combustion flame operated under near neutral (C2H2/O-2 similar to 1.0) condition in the open atmosphere. The thickness profile, nucleation density, surface morphology, and microstructure of the diamond films were analysed using surfometry, optical microscopy, X-ray diffraction and scanning and transmission electron microscopy. Photoluminescence (PL) spectroscopy (380 to 680 nm spectral range) was used for studying the distributions of crystalline defects and impurities at different growth regions along the radius of the circular (5-6 mm diameter) films, The film deposited from acetylene feather showed structural and crystalline inhomegeneities. The PL spectra originated from the centre of the growth region indicated a broad bright-blue luminescence band (around 2.81 eV). This bright-blue luminescence band appeared owing to the recombination of trapped electrons at the donor states with holes in the valence band. Substitutional nitrogen incorporated during film growth from open atmosphere possibly created deep donor states. The spectra recorded from the edge of the growth region of the same film exhibited some structural features (other than 2.81 eV) at 2.16, 2.34, (2.63 and 2.75), (3.10 and 3.19) eV. The prominent appearance of such PL emission bands from the optical centres involving isolated nitrogen-carbon vacancy, carbon interstitials and nitrogen-carbon interstitial related defects respectively, indicated that defect/impurity incorporations at the edge of the deposit were higher than the centre of the deposit. The radial gradient of substrate temperature and the non-uniform distribution of flame species/impurities were mainly responsible for such structural inhomogeneities. However, the PL spectra of diamond films deposited by the periodic exposure into feather and outer zone of the flame with time period (t(D):t(E) = 12 s : 3 s) ratio, exhibited the bright-blue luminescence band (around 2.81 eV) and a broad pink luminescence band centred around 2.16 eV. The structure around 2.16 eV was believed to be originated from the nano crystalline diamonds precipitated in the carbon matrix. The PL emission feature was found identical through out the growth region for this film. It is concluded that the thermal recycling to the growing films minimized the structural inhomogeneities.