For the microwave level meter based on the FM-CW radar, we analyze the spectrum correlation of beat signals and propose a measurement algorithm using the fact that there exists a peak in the spectrum correlation of beat signals when range difference is sufficiently small. This algorithm can compensate the nonlinear effect of VCO frequency sweep, making it possible to determine the range difference in a precise manner even using a practical VCO. We present some experimental results to show the validity of this algorithm.