Damerau-Levenshtein distance algorithm SQL

CREATE function dbo.DamerauLevenshteinDistance(@str1 varchar(48), @str2 varchar(48))

RETURNS int 
AS 
begin 
Declare @str1_len        int, 
        @str2_len        int, 
        @distance int 

select        @str1_len        = len(@str1), 
              @str2_len        = len(@str2) 

if ((@str1 IS NULL OR @str1 = '') AND (@str2 IS NULL OR @str2 = '')) 
set @distance = 0 

if (@str1 IS NULL OR @str1 = '') 
set @distance = @str2_len 

if (@str2 IS NULL OR @str2 = '') 
set @distance = @str1_len 

if ((@str1 IS NOT NULL OR @str1 <> '') AND (@str2 IS NOT NULL OR @str2 <> '')) 
begin 
        -- matrix that stores cumulative scores as strings are traversed 
        Declare @i int,                 
                        @j int, 
                        @cost int 

        Declare @d table(i int NULL,j int NULL,value1 int NULL) 

        -- fill in scores for first row and column 
        set @i = 0 
        while (@i <= @str1_len) 
                begin 
                        insert into @d (i,j,value1) values(@i,0,@i) 
                        set @i = @i+1 
                end --while 
        set @j = 0 

        while (@j <= @str2_len) 
                begin 
                        insert into @d (i,j,value1) values(0,@j,@j) 
                        set @j = @j+1 
                end --while 

        Declare @newvalue int, 
                        @x int, 
                        @y int, 
                        @z int, 
                        @tcost int, 
                        @a int, 
                        @b int 

        set @i = 1 
        while (@i <= @str1_len) 
                begin 
                        set @j = 1 
                        while (@j <= @str2_len) 
                                begin 
                                        if (substring(@str1,@i,1) = substring(@str2,@j,1)) 
                                                set @cost = 0 
                                        else 
                                                set @cost = 1 
                                        -- addition, subtraction, substitution costs 
                                        set @x=(select value1 + 1 from @d where i=@i - 1 AND j=@j) 
                                        set @y=(select value1 + 1 from @d where i=@i AND j=@j-1) 
                                        set @z=(select distinct value1 from @d where i=@i-1 AND j=@j-1) 
                                        set @z = @z + @cost 
                                        set @newvalue = dbo.Minimum(dbo.Minimum(@x, @y),@z) 
                                        insert into @d (i,j,value1) values(@i,@j,@newvalue) 
                                        if (@i > 1 AND @j > 1 AND substring(@str1,@i,1) = substring 
                                        (@str2,@j - 1,1) AND substring(@str1,@i - 1,1) = substring(@str2,@j,1)) 
                                                begin 
                                                        -- transposition cost 
                                                        set @a=(select value1 from @d where i=@i AND j=@j) 
                                                        set @b=(select distinct value1 from @d where i=@i - 2 AND j=@j-2) 
                                                        set @b = @b +@cost 
                                                        set @tcost=dbo.Minimum(@a,@b) 
                                                        Update @d set value1 = @tcost where i=@i AND j=@j 
                                                end 
                                        set @j = @j+1 
                                end --while 
                        set @i = @i+1 

                        end --while 
        set @distance =(select value1 from @d where i=@str1_len AND j=@str2_len) 
end 

return        @distance 
end