A fully optical method to perform quantum computation with transverse modes of the optical field propagating in waveguide is proposed by supplying the prescriptions for a universal set of quantum gates. The proposal for quantum computation is based on implementing a quantum bit with two normal modes of multi-mode waveguides. The proposed C-NOT gate has the potential of being more compact and easily realized than some optical implementations, since it is based on planar lightwave circuit technology and can be constructed by using Mach-Zehnder interferometer having semiconductor optical amplifiers with very large refractive nonlinearity in its arms.