The performance of free-space optical data transmission is severely deteriorated by the fluctuation of optical signal intensity, which is resulted from the bias drift of electro-optical modulation devices. In order to improve the performance of free-space optical communication systems, a bias-drift avoiding, beam steered free-space optical wireless communication system is presented based on polarization modulation for the first time to the best of our knowledge. An in-fiber diffraction device based on a 45° tilted fiber grating (TFG) serves simultaneously as an in-fiber polarizer, free-space light emitter, and beam steerer in the proposed communication system, which endows the proposed system with the merits of highly efficient, compact, stable and bias-drift free. The usage of 45° TFG has three benefits: 1), it realizes polarization modulation preventing bias-drift due to its polarization sensitive feature; 2), it enables stable and highly efficient in-fiber compact free-space light emitter; and 3) it accomplishes free-space beam steering due to its wavelength-depending diffraction characteristic. A 2.1 m free-space optical wireless data transmission has been demonstrated with a data rate of 4.8 Gbps per beam using 1.2 GHz bandwidth OFDM signals. This proposal prevents the bias drift issue and maintains high stability. Hence, it can be applied in some harsh situations and confidential data transmission fields.