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Inplane scattering levels in titanium-diffused lithium-niobate optical waveguides show two distinct stages as a function of diffusion time at fixed temperature: at first decreasing and then, eventually, increasing. The initially high level of inplane scattering is mainly due to the large number of near-surface defects associated with inhomogeneities occurring at early stages of the titanium indiffusion process. The subsequent decrease in inplane scattering with diffusion time is associated with spreading out of the optical energy and the smoothing out of the defective surface region. For longer annealing times the increasing density of misfit dislocations at the interface between the indiffused layer and substrate becomes the main source for light scattering.