We report a new technique for the demodulation of a closed fringe pattern by representing the phase as a weighted linear combination of a certain number of linearly independent Fourier basis functions in a given row/column at a time. A state space model is developed with the weights of the basis functions as the elements of the state vector. The iterative extended Kalman filter is effectively utilized for the robust estimation of the weights. A coarse estimate of the fringe density based on the fringe frequency map is used to determine the initial row/column to start with and subsequently the optimal number of basis functions. The performance of the proposed method is evaluated with several noisy fringe patterns. Experimental results are also reported to support the practical applicability of the proposed method. (C) 2016 Optical Society of America