I found these good articles on modern algorithms for password hashing:

http://www.f-secure.com/weblog/archives/00002095.html suggest the following three:
• PBKDF2
• Bcrypt
• PBMAC

Most notably, they are intended to be slow (so that bruteforce takes long time) and prevent rainbow table attack.

http://www.openwall.com/phpass/ is php implementation to use bcrypt. Read http://www.openwall.com/articles/PHP-Users-Passwords for explanation.

Here’s another article suggesting to use bcrypt: http://codahale.com/how-to-safely-store-a-password/