A simple and effective all-optical system, producing a multilevel coded optical signal based on the M-ASK technology and by the minimized equipment. The novel all-optical modulation technique for optical M-ASK generation is based on nonlinear interaction between optical signals, say between N 2-ASK modulated pump signals having extinction ratio ER1 and a single 2-ASK modulated optical probe signal having extinction ratio ER2. According to the invention, a 4-ASK optical signal can be obtained using just a single binary modulated pump optical signal and a single binary modulated probe optical signal.