A new estimation method based on modified performance index is proposed for time-varying process to avoid the ill-condition of least squares method. Based on the new method,a series of new recursive algorithms such as the new recursive least squares algorithm,the instrumental variable algorithm are constructed. The new identification method can ease the ill-condition and improve the identification accuracy without using the additional signals. Moreover, without additional computation,it is suitable for engineering practice very much. Both simulation results and practical operation show the new identification algorithm is effective. In this paper, the justification of this modified algorithm is proved.