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A new approach on optical label encoding for the realization of the all-optical label swapping in transparent optical packet switched networks is proposed and tested via simulation. The proposed method is based on the combination of the optical frequency shift keying (OFSK) modulated label with the on-off keying (OOK) modulated payload on the same optical carrier. The combination has been achieved by feeding the two independent optical signals, carrying the OFSK modulated label, and the OOK modulated payload, at the input of a semiconductor optical amplifier (SOA). The obtained four wave mixing at the output of the SOA combines label and payload on one carrier. The simulations have been carried out for 625-Mb/s labels and 10-Gb/s payload and for three 80-km span hops. At each hop the label was removed and a new locally generated label was loaded on the payload. The bit error rate calculations were made for both label and payload at each node, which proved the feasibility of the proposed method.