An all-fiber, phase controlled interferometer device is disclosed as well as its method of manufacture. This device is suitable for use in an optical DPSK demodulation system. It is comprised of two optical fiber couplers, each having two input and two output ports and two branches between the couplers of unequal length. The couplers have a splicing ratio of 50% over the wavelength operating range of the device. The two branches between the couplers are shaped to provide one bit of delay between the branches and are also shaped to make a compact device. Also, the two branches are formed in such a manner as to minimize birefringence in the device. In addition, a fiber heater is provided to heat the longer branch so as to obtain phase control of the interferometer. The method of producing such a device is also disclosed.