Optical waveguiding layers displaying great photorefractive sensitivity have been formed by diffusion of iron into LiNbO3. Thick phase gratings of greater than 50% diffraction efficiency have been formed within such waveguiding layers by intersecting guided beams of red light from a He-Ne laser. By writing the gratings in a sample heated to 160°C, fixed gratings of about 1% diffraction efficiency have been produced. Modulation of the diffracted beam by electro-optic deflection of the input beam has been demonstrated.