How do doctors decide which type of diabetes you have?

There are tests, such as the c-peptide test and some antibody tests, but to be truthful, they are rarely used. Most often, they use the situation as is and guess . Ie T1 tends to come on fast in young people and they generally have ketones as well as glucose in blood and urine. T2 tends to be more insidious and in older people, who usually don't have ketones. The next thing is the treatment. Insulin works for all kinds of diabetes. Diet control, Metformin, sulphonylureas and other oral treatment only work in T2. So if used and working, it must be T2 and if nothing but insulin works, it's T1
I suspect that most often they decide they were right if the treatment works. If it doesn't after a reasonable time, they might re-think. Since tests can be costly, they may well be the last resort.
Actually it's more important that the treatment work, than that you identify T1 or T2 or one of their subsets.

Angelc said:

So far just my fasting sugars ie. first thing in the morning have come down, to around 7 - 9, the rest of the day they remain in the 15 - 20 bracket.

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hi Angelc
there is a big discrepancy between these numbers you mention. A fasting measurement of 7-9 is a bit high but not disasterous and could fairly easily be improved, but 15-20 is really high and you need to get that sorted.
What sort of diet do you have? You probably know that certain eating patterns tend to make your blood sugar soar, although the details vary depending on the individual. Maybe with a modification in your diet you could bring these numbers down.

This might help you to understand LADA, latent autoimmune diabetes in adults and it's treatment and diagnosis in the UK.http://www.locallada.swan.ac.uk/faq.html
Worth noting are that people with one autoimmune disease may also contract autoimmune diabetes. Also because in LADA the cell destruction is slower than in classic type 1 some people may be able to control their diabetes for a period with oral drugs (on average 2-6 years) but they will eventually 'stop working
Tests for various autoimmune antibodies may indicate type 1 (in LADA notably antiGAD) , a C peptide test will show how much insulin you yourself are producing, this is low in LADA but may be at the lower end of normal earlier on in the process.
Even without the tests the persons reaction to insulin is a good indicator, people with type 1 tend to take far less insulin than someone with type 2 who has exhausted their insulin production.