Parallel solution of irregular problems require solving the graph partitioning problem. The extended eigenproblem appears as the solution of some relaxed formulations of the graph partitioning problem. In this paper, a new subspace algorithm for the solving the extended eigenproblem is presented. The structure of this subspace method allows the incorporation of multigrid preconditioners. We numerically compare our new algorithm with a previous algorithm based on Lanczos iteration and show that our subspace algorithm performs better.