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We propose a novel polarization dependent frequency shift (PDf) reduction method for fabricating a silica-based PLC DQPSK demodulator incorporating an asymmetrically positioned half-wave plate, and demonstrate error-free 43-Gbit/s demodulation for any incident SOP. The PDf has a detrimental effect on the demodulation performance of a DQPSK signal, and it is degraded by various kinds of PLC fabrication errors. In this paper, we focus on the polarization crosstalk in the coupler, which is one of the main causes of PDf. To eliminate such PDf, we controlled both the position of the half-wave plate in the MZI and the polarization of the propagated light. We describe the principle of this PDf reduction method in detail and provide a theoretical and experimental discussion. In addition, we describe a compact DQPSK demodulator composed of a single MZI based DQPSK demodulator with a 90-degree optical hybrid. This demodulator configuration can reduce the receiver's footprint. Finally we achieved a compact DQPSK demodulator with a low PDf of less than 0.10 GHz in the L-band.