With the advantages of high precision, full field and non-contact testing, the interferometers have been widely applied in the testing of optical elements. To meet the need of on-machine testing of optical elements in the machining stage, a compact interferometer with multiple working modes was proposed to achieve transient testing. The proposed system can work in modes including single-wavelength laser interferometer, multi-wavelength interferometer and LED interferometric microscope, enabling the testing of surface figure with large dynamic range, surface roughness microscopic structures. A polarization camera was utilized to realize the simultaneous phase-shifting measurement with a single shot, by which the effect environmental disturbance can be minimized. To demonstrate the feasibility of the proposed interferometer, the on-machine testing in various working modes have been carried out on diamond turning machine, as well as the control experiment with Zygo laser interferometer and Zygo optical profiler; Besides, the freeform surface testing has also been achieved with the proposed interferometer. High measurement accuracy and large dynamic range has been achieved in experiments. It was compact in system with dimensions of 195 mm×160 mm×65 mm, making it extremely suitable for installing and testing on machining equipment. Besides, the transient wavefront testing makes the proposed system insensitive to environmental disturbance, and it has a great prospect for application in on-machine testing of alignment tool and various optical elements in machining stage.