A method for allocating uplink and downlink bandwidth, includes: receiving, by a primary ONU, a primary PON downlink frame sent by a nested OLT, where the primary PON downlink frame carries a primary ONU uplink bandwidth grant and a secondary ONU uplink bandwidth grant; parsing, by the primary ONU, the primary PON downlink frame to acquire the primary ONU uplink bandwidth grant and the secondary ONU uplink bandwidth grant; and sending, by the primary ONU, a secondary PON downlink frame to a secondary ONU, where the secondary PON downlink frame carries the acquired secondary ONU uplink bandwidth grant. The present disclosure achieves an optimal overall performance for the two stages of PONs by considering general conditions of the two stages of PONs, and meanwhile ensures a maximum available bandwidth for the two stages of PONs during formulation of bandwidth grants.