In an elliptic billiard, we find avoided level crossings taking place over wide ranges, which are of a Demkov type for generations of eigenfunctions localized on an islands chain and its pair unstable periodic orbit. For a proof of the existence of avoided level crossings, first, we show that the quantized eigenvalue of the unstable periodic orbit, obtained by the Einstein-Brillouin-Keller quantization rule, passes the eigenvalues of bouncing-ball modes localized on the unstable periodic orbit after Demkov type avoided level crossings so that pairs of bouncing-ball modes are sequentially generated. Next, by using a perturbed Hamiltonian, we show that off-diagonal elements in Hamiltonian are nonzero, which give rise to an interaction between two eigenfunctions. Last, we verify that the observed phenomenon is Fermi resonance: that is, the quantum number difference of two normal modes equals the periodic orbits, where eigenfunctions are localized after an avoided level crossing.