Hi Carmel,
No, diet soda will not increase cholesterol or sugar levels. Diet soda is sweetened by an artificial sweetener - aspartame - that does not contribute sugar; therefore, does not affect your cholesterol.
The draw back to diet soda (or any soda for that matter) is carbonation (bubbles and fizz effect). Anything that's carbonated has a reduced acidity (or pH balance). This acidity promotes erosion of your tooth enamel. That would be one of the reason's dentist's are anti-soda!
All the best,
Lisa Nelson, RD, LN
Lower Cholesterol, Control Blood Pressure, Lose Weight