To meet the needs of high speed measurement on hardware, undersampling technique is applied to displacement measurement homodyne interferometer. For orthogonal undersampled signals, the phase to be measured cannot be solved by arctangent function and original unwrapping algorithm. In this paper, a corresponding algorithm is proposed to measure the phases of the undersampled signals in practical conditions. The algorithm is a combination of the original phase solving algorithm and the compensation period. In the algorithm, the phase estimation and the error parameter model based on least square fitting are used to iteratively solve the desired phase. The proposed method is verified by simulations and experiments, and results demonstrate the high feasibility and accuracy of the algorithm.