A novel sinusoidal phase modulating laser diode interferometer based on slowly varying approximation is proposed and demostrated. It is not necessary in principle to keep amplitutes of the first and second harmonic components equal in expriment, and dynamic range has been inrceased 3￣4 order. A PZT and Picomotor are used as displacement actuator to detect the resolution (or accuracy) and dynamic range. The accuracy is 5 nm when the displacement drived by PZT exceeds a half wavelength of the light. The maxmum displacement measured is more than 1 mm. This system can complete real time and auto measurement under noise circumstance.