The wavefront sensor based on defocusing grating has a great potential in the field of wavefront sensing, which attributes to many advantages such as fully optical measurement, simple configuration, ease to use, insensitivity to vibration and so on. However, traditional algorithms are suitable for point target and scarcely for extended object. To widen the application of this technology, a least square phase retrieval algorithm is proposed, which is suitable not only for point target but also for extended target, and the object can be restored simultaneously. Numerical simulations of phase retrieval using the proposed method demonstrate that the root mean square error is 0.18% without the consideration of noise. Additionally, the main factors which affect the retrieval accuracy are analyzed and some comparisons with traditional algorithms are carried out. Results show that the least square phase retrieval algorithm can accurately retrieve the wave-front of a point target or an extended target.