A diffuse illumination system for reducing diffusion-related illumination inhomogeneities includes an array of vertical cavity surface emitting laser (VCSEL) emitters and a diffusing element including a transparent substrate and an array of nanostructures. A dimension and a shape of each nanostructure is configured to retard phases of two orthogonal polarization states of light incident on each nanostructure from the emitters for reducing illumination inhomogeneities in the output.