Fourier transform infrared (FT-IR) spectroscopy and time domain reflectometry (TDR) have been employed to study nano-confinement effects in water-tetraethylene glycol monododecyl ether (C12E4) system as a function of the water to surfactant molar ratio (R) at 25 degreesC. The study emphasises that, at low R values, the vibrational dynamics of water entrapped between equidistant parallel bilayers of oriented surfactant molecules is significantly different from that of pure water whereas at R >7 it becomes practically indistinguishable. On the other hand, even at the higher R values investigated, the dielectric properties of the aqueous domain confined in water-C12E4 liquid crystals are found to be strongly affected by confinement effects. The observed single relaxation processes with a symmetrical distribution of relaxation time are discussed in terms of effects due to interfacial interactions and topological restrictions on water-surfactant head group dynamics in liquid crystals. Correlation between the structural and dynamical properties of water-C12E4 liquid crystals and thermal effects due to microwave irradiation on these highly viscous microheterogeneous systems are also discussed.