A blind channel equalization method called signal bias removal (SBR) has been proposed and proved to be effective in compensating the channel effect in telephone speech recognition. However, we found that the SBR method didn't work well when additive noise and multiplicative distortion are taken into account at the same time. In this paper, we propose a new method called modified signal bias removal (MSBR) which tries to overcome the problem described above in the SBR method. Some experiments are conducted to evaluate the effectiveness of the MSBR method. Experimental results show that the MSBR method outperforms the SBR no matter additive noise is considered or not in a telephone speech recognition system.