Here is an article from Php.net that talks about "Safe Password Hashing".
From the article:
When hashing passwords, the two most important considerations are the computational expense, and the salt. The more computationally expensive the hashing algorithm, the longer it will take to brute force its output.
There are two functions that are bundled with PHP that can perform hashing using a specified algorithm.
The first hashing function is crypt(), which natively supports several hashing algorithms. When using this function, you are guaranteed that the algorithm you select is available, as PHP contains native implementations of each supported algorithm, in case one or more are not supported by your system.
The second hashing function is hash(), which supports many more algorithms and variants than crypt(), but does not support some algorithms that crypt() does. The Hash extension is bundled with PHP, but can be disabled during compile-time, so it is not guaranteed to be available, while crypt() is, being in the PHP core.
The suggested algorithm to use when hashing passwords is Blowfish, as it is significantly more computationally expensive than MD5 or SHA1, while still being scalable.