High-capacity fiber-optic communications are promising technologies to satisfy people’s continuously growing demands for bandwidth hungry data services. Multi-wavelength optical circuit switching (OCS) technology is already widely deployed, however, with the limited number of transceivers equipped at each optical node and other constraints, the number of lightpaths which can be established and employed simultaneously in an optical network is restricted. This reduces the utilization efficiency of wavelength resources. Comparing to OCS, dynamic optical switching systems such as optical packet switching (OPS) offer higher efficiency in terms of wavelength resource utilization and have the potential to share more of the wavelength resources on fiber-links between larger numbers of users simultaneously. In such networks, bursty input signals or changes in traffic density may cause optical power surges that can damage optical components or impose gain transients on the signals that impair signal quality. A common approach for reducing gain transients is to employ electrical automatic gain control (AGC) or optical gain-clamping by optical feedback (OFB). AGC may be limited by the speed of the feedback circuit and result in additional transients. Meanwhile OFB can clamp the gain of power varying optical signals without transient but can introduce amplitude fluctuations caused by relaxation oscillations in the lasing cavity for large input power fluctuations. We propose and demonstrate a novel scheme for suppressing the power transients and the relaxation oscillations. This scheme can be utilized in optical amplifiers even if the optical feedback is employed.