Abstract: Two-step iterative shrinkage / Threshold (TwIST) of compressive sensing theory is introduced. Experimental works on reconstruction of single in-line hologram are developed. The goal is to eliminate the reconstructed conjugate information of single in-line hologram and overcome the shortage of digital holography on identifying the axial focal plane. Simulation analysis and experiment works are developed. First, a digital image and the standard resolution target are used as the samples for hologram, the quality of the reconstructed image based on TwIST and Fresnel approximation algorithm is estimated respectively. Then two bare fibers (diameter of 125 m) are selected as the test samples, identification capability of focal plane by TwIST is analyzed. The simulation and experimental results show that two-step iterative shrinkage algorithm can not only reconstruct the original information more than 68.73%, but also has a very good ability to identify the axial focal plane. These traits can help digital holography to detect some important parameters of functionally graded materials or the coating thickness of the optical functional coating devices.