It is shown that a three-level atom in the ⌳ configuration with arbitrary detunings can be exactly reduced to a two-level system with an effective Raman coupling, which depends nonlinearly on the intensity of the two radiation fields. This is done by exactly evaluating the unitary transformation introduced by Alexanian and Bose ͓Phys. Rev. A 52, 2218 ͑1995͔͒ for a three-level atom coupled to two modes of the radiation field. We obtain an exact transformed Hamiltonian in which one of the three levels is decoupled for all values of the detunings. In particular, our result is then valid for any ratios of the coupling constants to detunings, even for zero detuning, in contrast to earlier work which requires that these ratios be small. We find the the eigenvalues of the exact transformed Hamiltonian and study its population dynamics. ͓S1050-2947͑96͒08808-7͔