  We show that a collection of two-level atoms in an optical cavity beyond the
rotating wave approximation and in the dispersive and strong-coupling regime
constitutes a nonlinear medium and is capable of generating squeezed state of
light. It is found that squeezing produced in the strong-coupling regime is
significantly higher compared to that produced in the dispersive limit. On the
other hand, we also show that it could be possible to observe the Dicke
superradiant quantum phase transition in the dispersive regime where the vector
potential term is negligible. Such a system can be an essential component of a
larger quantum-communication system.
