We address the problem of routing Label Switched Paths (LSPs) in multi-layer networks based on the Generalized MultiProtocol Label Switching (GMPLS) paradigm. In particular, we pursue policies for choosing the appropriate layer to host a new LSP request, as we find that such layer-preference policies have significant impact on network performance. We discuss several simple layer-preference policies and we reveal why these simple policies ruin network performance in the long run. Consequently, we develop an efficient heuristics, the Min-phys-hop routing and wavelength assignment algorithm, to govern the selection of the best layer of a multi-layer network in which to host new LSP requests. We discuss the applicability of this algorithm with respect to the state-of-the-art GMPLS standards, above all, the GMPLS routing extensions to OSPF-TE. By extensive simulations, we justify that the Min-phys-hop algorithm produces closeto-optimal blocking and resource consumption under almost all possible selections of input parameters, and this is regardless of the wavelength and Optical-Electrical-Optical (OEO) conversion capability present in the network.