A coplanar laser illumination and imaging subsystem deployable in an image capturing and processing system, and including an image formation and detection (IFD) subsystem having an image sensing array and optics providing a field of view (FOV) on the image sensing array, and forming an image of an object within the FOV and detecting said image on the image sensing array and producing a digital image thereof. The system includes a spectral-mixing based illumination subsystem having an array of VLDs for producing a visible illumination beam, and an array of IR laser diodes (LDs) for producing an invisible illumination beam. The visible and invisible illumination beams spatially overlaps and spatially/temporally intermixes with each other to produce a composite spectrally-mixed illumination beam having a relative power ratio (VIS/IR), and is substantially coplanar with the FOV of said image sensing array. A laser despeckling mechanism is provided for reducing the coherence of the composite spectrally-mixed illumination beam, and/or its components, so that the digital images produced by the IFD subsystem having substantially reduced levels of speckle-pattern noise when the laser despeckling mechanism is operational.