Real-time monitoring of the growth of plasma deposited microcrystalline silicon (mu c-Si:H) by multi-wavelength phase-modulated ellipsometry is presented. Several growth models for process-monitoring are reviewed. In particular the inhomogeneity in mu c-Si layers is treated by allowing graded-index profile in the bulk. Using the Bruggeman effective medium theory, we describe the optical properties of mu c-Si and the monitoring of the crystallinity in the upper and lower parts of the layer, and the thickness. The inversion algorithm is very fast, with calculation times within 5 s using typical PC. This method opens up ways for precise control of surface roughness, bulk thickness, and crystallization of both the top and bottom interfaces of the layer during processing devices such as solar cells and thin film transistors.