We describe theoretically the modified Sagnac interferometer, which ha
s spectrally selective output characteristic. Such a spectrally select
ivity interferometer may operate as a wavelength division multiplexer
(WDM). A polarization-independent Sagnac loop based WDM with bandwidth
of 0.5 nm have been demonstrated experimentally. Spectral characteris
tic changes with temperature are analyzed. Temperature-induced wavelen
gth shift of 1nm/K have been measured.