In this work we have combined the generalized augmented space method introduced by one of us with the recursion methood of [Haydock and Te, Phys. Rev. B 49, 10845 (1994)](GASR), within the framework of the local density functional based linear muffin-tin orbital basis (TB-LMTO). Using this we have studied the effect of short-range ordering and clustering on the density of states, optical conductivity, and reflectivity of 50-50 CuZn alloys. Our results are in good agreement with alternative techniques. We argue that the TB-LMTO-GASR is a feasible, efficient, and quantitatively accurate computational technique for the study of environmental effects in disordered binary alloys.