In digital world various authentication techniques are used, password authentication is one of the traditional technique. Many improvements are made in password authentication techniques as only password authentication cannot withstand today?s attack. One of the password authentication technique is two-server password authentication. In two-server password-authenticated key exchange (PAKE) protocol, a client splits its password and stores two shares of its password in the two servers, respectively, and the two servers then cooperate to authenticate the client without knowing the password of the client. In case one server is compromised by an adversary, the password of the client is required to remain secure. Research work proposed two servers that stores two shares of identity password in encrypted format. The two shares of passwords will be stored in such a way that identity password will be reformed with the help of any user defined algorithm. Along with password authentication, here idea is to implement identity based on encryption technique to encrypt the documents and messages. Proposed system will prevent dictionary, shoulder surfing, and key logger attacks