A method is provided for optimizing the performance of laser-pumped atomic frequency references with respect to the laser detuning and other operating parameters. This method is based on the new understanding that the frequency references short-term instability is minimized when (a) the laser frequency is tuned nominally a few tens of MHz away from the center of the atomic absorption line, and (b) the external oscillator lock modulation frequency is set either far below or far above the inverse of the optical pumping time of the atoms.