Phase-demodulated phase-sensitive time domain reflectometer (Φ-OTDR) has attracted much attention because of its linear relationship between the phase variation and the amplitude of the vibration. However, it suffers from limited signal-to-noise ratio (SNR) and signal fading, due to the inherent low Rayleigh scattering coefficient and randomly spatial non-uniform distribution of the refractive index. Here, a Φ-OTDR system based on wavelength diversity is demonstrated, which can enhance the SNR and reduce signal fading simultaneously by using differential vector aggregation method. A theoretical model is built, and the linear relationship between SNR improvement and diversity scale is analyzed. The verification experiment is conducted, and in the further experiments, the frequency and wavelength diversity technology are cascaded to achieve a diversity scale of 20. After differential vector aggregation method, the external disturbance signal is well reconstructed and the noise floor is reduced by 13.4dB, which is basically consistent with the theoretical analysis.