Our congress is locked into a two-party system because each office elects a single candidate, requiring a majority of votes over all others. Many people who would otherwise vote for a third-party candidate will instead vote for "the lesser of two evils," thinking that a vote for the person they really support would be wasted.
Particularly in today's global economy, the distinction between congressional districts and even state lines is increasingly irrelevant except when it comes to gerrymandering.
There are many forms of proportional representation used throughout the world; further study would be needed to determine the best one for the U.S. My recommendation is each state elects its two Senators together, while the House uses an open party list voted on by the entire population.