Given n terminals in the Euclidean plane and a positive constant, find a Steiner tree interconnecting all terminals with the minimum number of Steiner points such that the Euclidean length of each edge is no more than the given positive constant. This problem is NP-hard with applications in VLSI design, WDM optical networks and wireless communications. In this paper, we show that (a) the Steiner ratio is 1/ 4, that is, the minimum spanning tree yields a polynomial-time approximation with performance ratio exactly 4, (b) there exists a polynomial-time approximation with performance ratio 3, and (c) there exists a polynomial-time approxi-mation scheme under certain conditions.