We present an efficient algorithm for simulation of deformable bodies interacting with two-dimensional incompressible flows. The temporal and spatial discretizations of the Navier-Stokes equations in vorticity stream-function formulation are based on classical fourth-order Runge-Kutta and compact finite differences, respectively. Using a uniform Cartesian grid we benefit from the advantage of a new fourth-order direct solver for the Poisson equation to ensure the incompressibility constraint down to machine zero. For introducing a deformable body in fluid flow, the volume penalization method is used. A Lagrangian structured grid with prescribed motion covers the deformable body interacting with the surrounding fluid due to the hydrodynamic forces and moment calculated on the Eulerian reference grid. An efficient law for curvature control of an anguilliform fish, swimming to a prescribed goal, is proposed. Validation of the developed method shows the efficiency and expected accuracy of the algorithm for fish-like swimming and also for a variety of fluid/solid interaction problems.