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Due to the electronic processing bottleneck of current routers and switches, it is certain that Internet will evolve into a WDM-based all-optical network. We assure that the optical router will play key roles in the future optical Internet, so it is necessary to research and develop the optical router. In this paper, we propose a novel architecture of optical router, which is based on labeled optical burst switching mechanism. The proposed architecture can provide all-optical edge-to-edge data routing and transport services without O-E/E-O conversions. The paper has studied and analyzed some key issues in system design including the burst data format and assembly, the extraction and recognition of burst header, optical routing and label switching, and congestion resolution. Moreover we put forward some feasible solutions to the issues, and design an experimental system which results are shown.