Efficient systems, devices, apparatus and methods to generate, transmit and detect differentially encoded 8-level phase-modulated optical signals for spectrally efficient optical communication systems is invented. It includes an electrical encoder and an optical encoder for generation of differentially encoded 8-level phase-modulated optical signals and optical demodulators and balanced detectors for detection of the optical signals. The optical signals are transmitted through optical fiber links or air. The electrical encoder maps three independent data channels into three differentially-encoded data sequences. In the optical encoder, the encoded data sequences from the electrical encoder drive optical modulators to generate differentially-encoded 8-level phase modulated optical signals at a symbol rate equal to the bit rate of each input data channel. After transmission through optical fiber, the optical signals are demodulated optically and the original data are recovered by the balanced detectors with direct detection.