Recently, several existing and proposed network architectures of IP over WDM are discussed. The twolayer model, which aims at a tighter integration between IP and WDM layers, offers a series of important advantages over the multi-layer architecture. Multiprotocol Label Switching (MPLS) and its extension, Generalized Multiprotocol Label Switching (GMPLS), have been proposed as the integrating structure between IP and WDM layers. Several integrated routing algorithms (IR) have been proposed to solve the routing problem in IP/WDM networks. But few of these algorithms consider the physical hop and the bandwidth fragments, which will results in some drawbacks. This paper develops a new integrated on-line routing algorithm, called hop-based bandwidth defragment algorithm (HBD). It makes uses of the statistic information of link-state and resource availability to determine whether it is better to route an arriving request over the existing topology or to open new wavelength paths. The HBD algorithm is not only to minimize the total number of physical hops used by the existing lightpaths and new lightpaths created for routing LSPs, but also to minimize the number of bandwidth fragments, which will possibly lead to increased acceptance of requests that arrive later. Simulation results show that HBD performs better in terms of blocking probability and bandwidth blocking ratio than other existing approaches.