There is a poor efficiency for pulse position modulation (PPM) in combination with binary correction coding for free space optical communication. To solve the problem, a new scheme, which introduces bit interleaving and iteration technology into product coded PPM, is proposed. Bit interleaver is used to make signal decline independently. Soft demodulation method of PPM is derived under weak turbulence and Gaussian cascaded channel based on maximum-likelihood criterion. Combined with soft input soft output (SISO) algorithm of block decoding, iteration between demodulation and decoding is achieved. Simulations under weak turbulence show that, the scheme provides 1 dB gain at bit errror rate (BER) of 10-5 compared with bit interleaved product coded PPM with independent demodulation and decoding, and has perfect error performance at high code rate, which is valuable in high reliability in information transmission with comparatively lower bandwidth requirement. The proposed scheme provides a solution to efficiently unite error control coding with PPM in atmospheric optical wireless communication systems.