The prolification of non-linear loads results in deterioration of the quality of voltage waveform at the point of common coupling of various loads . Passive filters have been used to limit the flow of harmonic current in system. However they introduce resonances in the power system. Active filters are becoming viable alternative to passive filters. They can substantially reduce any line current harmonics generated by non-linear load. In particular, the proposed scheme is discussed in terms of principle of operation, power system design, and analysis under unbalanced operating conditions. Finally, predicted results are verified experimentally.