Abstract
A stochastic density-matrix equation for an atom strongly driven by finite-bandwidth squeezed light is derived. The quantum properties of the light are accounted for by a doubling of dimensions of the stochastic process for c-number electric field amplitudes. The possibility of obtaining reduced atomic linewidths in the absorption spectrum of the atom embedded in colored squeezed light is discussed, based on nonperturbative solutions of stochastic optical Bloch equations.