An efficient and accurate numerical scheme is proposed for solving the transverse electric (TE) mode electromagnetic (EM) propagation problem in two-dimensional earth. The scheme is based on the alternating direction finite-difference time-domain (ADI-FDTD) method. Unlike the conventional upward continuation approach for the earth-air interface, an integral formulation for the interface boundary is developed and it is effectively incorporated to the ADI solver. Stability and convergence analysis together with an error estimate are presented. Numerical simulations are carried out to validate the proposed method, and the advantage of the present method over the popular Du-Fort-Frankel scheme is clearly demonstrated. Examples of the electromagnetic field propagation in the ground with anomaly further verify the effectiveness of the proposed scheme.