In Optical Burst Switching (OBS) networks, when contention occurs at an intermediate switch, two or more bursts that are in contention can be lost because a forwarding path reservation is not made for a burst until a control message for the burst arrives. While deflection routing protocol is proposed as one of the contention resolution techniques, there has been no appropriate deflection routing algorithm to find an alternate route. In this paper, we propose a novel deflection routing algorithm to compute alternate routes with better performance as compared to other known techniques. This algorithm deflects contending bursts using a path that is based on minimization of a performance measure that combines distance and blocking due to contention. We will show, through simulation results, that there is an improvement in terms of loss with increased network throughput.