There are some techniques which combine phase-shifting interferometry and two-wavelength interferometry. In this paper, a new algorithm that is called fringe-counting two-wavelength method is presented for the technique. In this algorithm, integer fringe orders are counted on the basis of the fringe patterns for the two wavelengths and fractional orders are determined from one of the two fringe patterns. The algorithm is compared with the equivalent wavelength method through discussion and simulation. An experimental measuring system was constructed with the measuring range of 3μm. The results of measurements for a polished surface with an indentation and a surface with steps confirm the above comparison.