A passband-flattened phasar including two free space regions coupled by a plurality of waveguides having predetermined differences between their lengths so as to act as an arrayed waveguide grating. The phasar is particularly useful in a wavelength-division multiplexed (WDM) optical communication system transmitting multiple wavelength systems arranged in a wavelength comb with a constant wavelength channel spacing. The input waveguide is coupled to the first free space region through a Mach-Zehnder interferometer (MZI) having two waveguide arms of differing lengths receiving approximately equal amounts of the input signal. The arms differ in lengths so as to produce a phase difference between them. In a WDM network, the waveguide arm produce a phase difference such that the free spectral range of the MZI equals the wavelength channel spacing, such that the wavelength response of the MZI is the same for each of the WDM wavelengths. The two outputs of the MZI are coupled into the input end of a multi-mode interferometer (MMI) with a lateral separation which provides a lateral spatial dispersion in the MMI equaling the lateral spatial dispersion of the conventional phasar. Thereby, a larger portion of the passband is equally passed through the phasar.