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Blocking probability has been one of the key performance indexes in the design of wavelength-routed all-optical WDM networks. Existing research has demonstrated that an effective Routing and Wavelength Assignment (RWA) algorithm and wavelength conversion are two primary vehicles for improving the blocking performance. However, these two issues have largely been investigated separately; in particular the existing RWA algorithms have seldom considered the presence of wavelength conversion. In this paper, we firstly demonstrate that the existing dynamic RWA algorithms do not work well in the presence of wavelength conversion as they usually only take into account the current traffic, and do not explicitly consider the route lengths. We then propose a weighted least-congestion routing and first-fit wavelength assignment (WLCR-FF) algorithm that considers both the current traffic load and the route lengths jointly. We further introduce an analytical model that can evaluate the blocking performance for WLCR algorithm. We carry out extensive numerical studies over typical topologies including ring, mesh-torus, and the 14-node NSFNET; and compare the performance of WLCR-FF with a wide variety of existing routing algorithms including static routing, fixed-alternate routing and least-loaded routing. The results conclusively demonstrate that the proposed WLCR-FF algorithm can achieve much better blocking performance in the presence of sparse or/and full wavelength conversion.