A correlation-based processing algorithm for bubble identification by a planar fluorescence for bubble imaging (PFBI) technique is presented in this paper. The algorithm includes procedures to identify bubble positions and sizes, as well as to track bubbles and correct bubble displacement vectors. Moreover, several schemes for calculation time optimisation were realised to achieve a reliable calculation time. The developed algorithm identifies and tracks overlapping bubble images or images with non-uniform intensity distributions. The employed correlation and iterative passing approach provides sub-pixel accuracy of bubble displacement estimation. In addition, the presented algorithm for bubble ring detection can be easily applied to shadow photography images of bubbles, after the application of a derivative filter. The PFBI technique, combined with the particle image velocimetry and particle tracking velocimetry algorithms, was applied for the experimental study of bubbly free jet two-phase flows at Re = 12,000. Four cases of volumetric gas content in the jet core were studied: 0, 1.2, 2.4 and 4.2%, with the same mean bubble diameter-0.85 mm. The developed technique measures two-dimensional distributions of instantaneous void fractions, as well as both gaseous and liquid-phase velocities. Consequently, the mean void fraction and velocity fields and a set of second-order statistical moments were obtained, including correlations of void fraction and velocity pulsations. It was shown that the increase in volumetric gas content leads to the suppression of liquid-phase velocity fluctuations in the jet mixing layer.