The invention relates to a composite yarn compounded by double yarns through using filament screens to cover downwards and support upwards, a spinning method and application thereof. The composite yarn is a double-screen composite yarn with a 3*2 axis formed by clamping and wrapping short fiber yarns through a pair of double filament screens. The composite yarn with three types, consisting of double screen wrapping/double screen wrapping, screen-wrapping screen covering/screen-wrapping screen covering and double screen wrapping/screen-wrapping screen covering, can be woven into textiles and high-grade fine fabrics with clear texture, softness, abrasion resistance, high strength, anti-fluffing anti-pilling property, beautiful appearance and comfortableness. The method for producing the composite yarn comprises the following steps of: arranging a yarn guiding hook and a filament spreading device on a ring spinning frame, dividing four bunches of long filaments into two uplink bunches and two downlink bunches through the filament guiding hook, feeding the uplink bunches and the downlink bunches into respective filament spreader for spreading, forming two paths of covering filament screen and support filament screen, clamping and wrapping the respective short fiber yarns at a twisting triangular region, and compounding to form the double-screen composite yarn. The method provided by the invention is suitable for spinning protective, soft and smooth composite yarns from ultrashort, easily-flaky and easily-flying fibers and shorter and weaker recycled fibers.