An adaptive optical interconnect network is proposed for data and image compression. The network features counterpropagating light through a single lens. The Fourier optical system uses a deformable grating modulator, CCD detector, and an analog CCD processing section in a monolithic chip as the interface device. The compression of data/images uses a new alogrithm that is a generalization of the wavelet transform. A dual space representation of the data is formed and is output through an electronic interface. The module is a 3D integrated optical/analog electronic hybrid module that is lowpower, lightweight, and small.Commercial Applications:signal/ data compression for TV transmission, pattern recognition for medical imaging and analysis, and real-time industrial inspection.