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In this paper, we report on the application of wavelet-based FDTD in numerical simulation of erbium-ytterbium co-doped waveguide amplifier (EYCDWA) using multi resolution analysis (MRA). The difference formulation for multiresolution time domain(MRTD) based on Daubechies wavelets is derived, and the gain characteristics of EYCDWA is simulated by MRTD. It demonstrates that this new algorithm is valid and shows good agreement with experimental results.