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This paper presents an improved single-phase passive-standby uninterruptible power supply (UPS) for low cost applications. The proposed system includes an input rectifier/charger and a switching inverter. It is basically an offline UPS structure, but has nearly the performance of a line-interactive UPS. It can continuously regulate the sustained voltage swells and sags by injecting a voltage in series with the source voltage in the normal mode, and can be switched smoothly to back-up mode when the utility voltage goes outside the specified range, or fails. The regulation range is also larger than conventional offline and line-interactive UPSs. Additionally, the proposed system has no low frequency transformer, which would involve a heavy and bulky structure. Theoretical analysis has been achieved based on the power flow theory. Case study is demonstrated by means of a prototype experiment to prove its performance and effectiveness.