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Optical networks provide a new dimension to meet the demands of exponentially growing traffic. Optical packet switching requires a good switch architecture, which eliminates the O/E/O conversion as much as possible. Wavelength Division Multiplexing (WDM) provides a breakthrough to exploit the huge bandwidth of the optical fiber. Different applications have different requirements, which necessitate employing differentiated services. This paper presents the idea of a priority-based λ-scheduler, where the packets are differentiated into different classes and services are provided accordingly. For example, class 0 can correspond to non real time applications like email and ftp, while class 1 can correspond to real-time audio and video communications. The architecture is based on that of the λ-scheduler and hence it has the added advantage of reduced component cost by using WDM internally.