First thing's first - the MySQL PASSWORD() function is a hashing function, so when you say "encryption" you should really say "one-way encryption" because otherwise most people tend to think about forms of encryption that can later be decrypted.
Second, there are many standard hashing algorithms out there, such as MD5, SHA1, SHA256, etc. For example, a quick Google search turned up the HashBytes function for MS SQL Server.
Finally, note that there is no reason that you need the SQL server to do the hashing for you; PHP is more than capable of doing this. In fact, I usually prefer to keep the hashing in the PHP code, so that it is not only database-independent, but in the event that the SQL server isn't on the same machine I don't want to have to worry about whether or not someone can capture the SQL traffic (in which the password is being sent in plain text).