A phase-shifted demodulation technique with a 3×3 coupler and ellipse fitting algorithm (EFA) for the interrogation of interferometric sensors is proposed. To reduce the error of the EFA as to measure small phase signals, additional phase modulation is introduced. The additional modulation provides a walk of the operating point along the Lissajous ellipse large enough to permit calculation of the ellipse parameters at every moment. Experimental result shows that this technique demonstrates high accuracy and stability for measuring small phase signals. The setting of this technology expands the application of the EFA in fiber-optic phase demodulation technology.