We investigated the influence of strain on the optical birefringence in waveguides consisting of Ga x In 1 − x As InP multiquantum well layers. The range of growth parameters to achieve good quality material for the waveguide structures were determined. In a number of layer structures low-loss optical waveguides and PHASAR demultiplexers were fabricated and characterized. The polarization dependence of the demultiplexer can be reduced by using quantum wells strained in tension. Without any precaution, the tensile strain in the well is limited by relaxation at ϵ w ≈ −0.8%. The strain in the well can be further increased to ϵ w ≈ −1% by introducing a strain-balancing layer of a compressive strained InAs monolayer in the InP barrier. But polarization independence is not yet achieved. The results indicate, that there is no negative effect of the strain-balancing layer on the optical performance. Also a number of design criteria for polarization independent waveguides are determined.