The direct parameter estimation algorithm is applied to the simple linear maneuvering model (T-K model). The algorithm is composed of the IIR (Infinite Impulse Response) digital filters and RLS (Recursive Least Square) method. The IIR digital filters are introduced to avoid taking direct derivatives and to reduce the effects of measurement noise. Furthermore, the digital filters are free from the initial condition problem and the accumulation problem of integration error. In order to discuss the quantitative accuracy, the authors carried out onboard tests. And, the direct parameter estimation algorithm is compared with an indirect algorithm with RLS method. There is satisfactory agreement of the ship maneuverability indices T-K estimated by the direct identification method and the ordinary graphical analysis. This concludes that the direct parameter estimation algorithm With IIR filters is a powerful tool for on-line identification of continuous systems.