In this study, the generalized modified power method was extended to two-dimensional problems. A direct application of the method to two-dimensional problems was shown to be unstable when the number of requested eigenmodes is larger than a certain problem dependent number. The root cause of this instability has been identified as the degeneracy of the transfer matrix. In order to resolve this instability, the number of sub-regions for the transfer matrix was increased to be larger than the number of requested eigenmodes; and a new transfer matrix was introduced accordingly which can be calculated by the least square method. The stability of the new method has been successfully demonstrated with a neutron diffusion eigenvalue problem and the 2D C5G7 benchmark problem.