AD8207 experiencing noise on the OUT pin

Hello,

I want to use AD8207 in combination with an ATMEGA328PU microcontroller. ATMEGA takes care of 10 bit AD conversion. The AD8207 is setup in a Vcc = 3,3V configuration with Vref1 connected to Vcc and Vref2 connected to GND. So I can use the AD8207 for bidirectional current sensing. If I short circuit the inputs of AD8207 pin 1 & 8 I notice the voltage on the out pin is straight in the middle at 1,65V (measured using a voltmeter). However the ATMEGA328PU ADC shows the values jumping up and down between 499 to 520 (where Vcc equals a quantized value of 1023), where I expected a steady value of 511 or 512. It seems there is noise present on the OUT pin. When I connect a dc battery of 1.2 V directly to the ADC input of ATMEGA (so disconnect AD8207 out pin first), the quantized value is steady and does not jump up and down (using the same VCC). To me that proves that it's not the ATMEGA showing problems. I probed the out pin with an oscilloscope, and sure enough there seems to be a broadband noise superimposed on the DC of about 20mV p-p.

I also scrutinized the Vcc chip (LM2931A33) and replaced it by a 3,7V battery powering AD8207 and ATMEGA: no change in behavior.

I replaced the AD8207 with another sample, but with no effect.

Now all this circuitry is build as a prototype on experimental board with the AD8207 soldered on top of a SOIC-8 break-out board. Still I did my best to decouple Vcc using a 100nF capacitor near to the chip. I cannot seem to get it stable. I checked the datasheet but I don't see any instructions an issue like I am experiencing now.

Any tips anyone?

Regards,

PeetD