A new design method for binary barcode was proposed, which was suitable for the photoelectric location coding of absolute style. The traditional photoelectric coder was mainly based on the technology of Moiré fringe grating, the coder was simply structured and could convert the displacement measurement into the electric impulse. However, the application of photoelectric coder was restricted because of the relative measurement style. The new method for the binary code of this dissertation, designed a grating which included three different types of frequency information in the single code channel, and had constructed a new binary barcode by the binary impulse encode modulation and method of the error diffusion. Part of the photoelectric location barcode was imaged on the CCD, and the code information was captured by the CCD simultaneously. By using of the FFT, filter and IFFT, we will found the phase information of the three frequency grating. By using the Excess Fraction Method (EFM), we can get the absolute phase distribution so we can get the information of the absolute position. The new method has preserved the advantage of the simple structure of the single code channel Moiré fringe grating. At the same time, we can let the absolute position measurement come true just like the multi-code channel grating coder. This paper introduces the detailed description of the coding method, the processing method for code information and experimental data of the computer simulation. The new method proposed has a broader application in absolute photoelectric position coder and the digital level.