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A promising approach is presented for routing and forwarding optical packets with 10 Gbit s rate based on the information of a label conveyed by a subcarrier multiplexed (SCM) signal around 18 GHz. Although the application of an SCM label for routing optical packets has already been demonstrated, there are still many open problems. Therefore a complete routing node was developed and its functionalities were investigated. Six parallel channels were operated in a 50 GHz dense wavelength division multiplexing (WDM) system without any noticeable interference between the channels containing the SCM labels as well. The degradation of signal transmission over many cascaded hops was also investigated. Only 1 dB penalty was obtained for 16 cascaded hops at 10-12 bit error rates. A novel method was developed for routing packets with variable length which is important for the transmission of IP signals. The experimental results show the feasibility of the presented approach for the next-generation optical internet networks.