We consider a model of environment-induced dissipationless decoherence of a
quantum system where the system is coupled to the bath degrees of freedom
via the system Hamiltonian itself. We solve exactly for the reduced density
operator of the system for an arbitrary spectral density of the thermal ba
th and also write down an exact master equation in the Lindblad form. We co
mpare and contrast the above results with those obtained by considering the
system frequencies to be randomly modulated as in stochastic models. We ob
serve that a coupling to the bath as above necessarily induces a Kerr-like
coherent contribution in the reduced dynamics of the system. This Kerr-like
term is a reflection of the quantum nature of the bath and cannot be obtai
ned from stochastic models. For the special case of a harmonic oscillator w
e consider the influence of decoherence and its relation with phase diffusi
on. Our numerical results exhibit oscillations in the evolution of system v
ariables which overall is a signature of the quantum nature of the environm
ent.