Studies of the electrooptic effect in potassium tantalate niobate (KTN) crystals, and lithium doped KTN (KLTN) crystals in the vicinity of the ferroelectric phse transition are reported. It was observed that in KTN the standard electrooptic behavior is accompaniesd by electrically induced depolarization of the light traversing through the crystal. This behavior is attributed to the influence of the fluctuating dipolar nanoclusters that are formed in KTN above the phase transition due to the emergence of the Nb ions from their respective centers of the unit cell. It was shown in addition that this behavior is inhibited in KLTN which enables exploiting the exceptionally large electrooptic effect manifested in this crystals upon approaching the phase transition. Furthermore, it was shown that the photorefractive effect in KLTN is also strongly affected by the formation of the dipolar nanoclusters, which under specific condition leads to diffractionless propagation of light beams traversing through the crystal.