A new optical communication system exhibiting a double security level is pr
esented information coding is based on combined modulation formats of two d
ata streams over the same optical carrier. Incoherent and coherent optical
encryption algorithms are presented and are theoretically analyzed. The opt
ical encryption method is transparent to data bit rates. Furthermore, it re
quires "on-line" data decoding with no possibility of recording and further
processing The incoherent scheme is very practical and can be implemented
in existing optical communications systems using currently available techno
logy. Computer experiments of the incoherent method indicate less than 25 d
B of signal to noise ratio required ed for 10(-9) bit error rate and inelig
ible information decoding rime of more than 10(8) years.