We formulate an efficient exact method of propagating optical wave packets (and cw beams) in isotropic and nonisotropic dispersive media. The method does not make the slowly varying envelope approximation in time or space and treats dispersion and diffraction exactly to all orders, even in the near field. It can also be used to determine the partial differential wave equation for pulses (and beams) to any order as a power series in the partial derivatives with respect to time and space. The method can treat extremely focused pulses and beams, e.g., from near-field scanning optical microscopy sources whose transverse spatial extent in smaller than a wavelength.