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An in-band labeling scheme with filter-based label extraction is employed for very high-speed optical packet-switching. The scheme shows a potentially high scalability, up to 25 labels in a 5-nm bandwidth packet using commercial arrayed waveguide gratings as the label processor. Switching is demonstrated using packets with two different 9-ns labels, 6.4- and 4.6-ns guard times, and 56.8-ns payload at 160 Gb/s. The system uses a tunable optical filter as the label extractor, a hybrid integrated optical flip-flop, and a high-speed semiconductor-optical-amplifier-based wavelength converter. Error-free operation is achieved with acceptable error penalties.