A display system (10) with reduced speckle has a light source (70) providing an illumination beam and a linear light modulator (85) having at least one linear array of light modulating devices for forming a modulated beam. The modulated beam has a plurality of orders of diffracted light. An obstructing element (82r,82g,82b) blocks a zeroeth order reflected light from the modulated beam. An angle-transforming optical assembly (30) anamorphically conditions the modulated beam. A scanning element (77) scans the modulated beam toward a display surface (90) for forming a two-dimensional image thereon.