This paper reports recent progress in achieving subhalf-micron feature sizes with UV laser illumination based on a novel interferometric phase shifting (IPS) technique. In the IPS arrangement, the intensity and amount of phase shift of the shifted beam can be controlled continuously and independently using the same mask. Consequently the method can be considered as a convenient general testbed for practical phase shifting concepts such as strong, weak and attenuated phase shifting. Recent measurements of the lithographic performance of a new concept are reported where phase shifting is combined with off-axis illumination. Experimental as well as simulation data are used to demonstrate this new method. A lithography simulator, Depict from Technology Modeling Associates, Inc. and a related Integrated CAD Framework which is being developed at Rice University was used to simulate and evaluate the performance of the IPS scheme.