As the network applications develop, routers must support those functions such as firewalls, provision of QoS and traffic billing etc. All these functions need classification of IP packets, according to which it is determined how different packets are processed subsequently. In this paper, a new IP classification algorithm is proposed based on the Grid of Tries algorithm. The new algorithm not only eliminates original limitations in the case of multiple fields but also shows better performance in regard to both time and space. It has better overall performance than many other algorithms.