The proposed research is a renewal of ECS-9710631 that was awarded for a period of 12 months in FY98. This is a collaborative research between Northwestern University (Kumar) and Stanford University (Fejer) began in February 1998. The research goal is to develop compact and reliable sources of highly-squeezed light using lithium niobate waveguides. The proposed project includes activities in (1) improving the amount of squeezing obtained from waveguide devices, (2) implementing a novel Sagnac squeezing geometry, and (3) demonstrating integrated waveguide squeezing devices.