A coaxial optical component and method of packaging and manufacturing a coaxial optical component. A dual fiber collimator is formed from a dual fiber pigtail and a collimating lens. The dual fiber pigtail and the collimating lens are adequately aligned such that the optical loss is minimized. Spacers are placed around the dual fiber collimator and epoxy is placed between the spacers and around the dual fiber collimator. The dual fiber collimator and the spacers are inserted in one end of a metal housing and aligned before the epoxy is cured. The spacers thus position the dual fiber collimator within the housing while separating the dual fiber collimator from the housing. The metal housing includes an extended portion adapted to receive another optical element for use with the dual fiber pigtail. Alternatively, the dual fiber collimator is replaced with a different optical element and secured within the metal housing.