A proposal is made for the generation of polarization-entangled photon pairs from a periodically poled crystal allowing for high collection efficiency, high entanglement, and stable operation. The theory is formulated for colinear propagation for application to waveguides. The key feature of the theory is the use of type II phase matching using both the +1 and -1 diffraction orders of the poling structure. Although these conditions are fairly restrictive in terms of operating parameters, practical operating conditions can be found. For example, we find that a HeNe pump laser may be used for a periodically poled rubidium-doped potassium titanyl phosphate (Rb:KTP) waveguide to yield single mode polarization-entangled pairs. Fidelities of 0.98 are possible under practical conditions. (C) 2011 Optical Society of America