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This paper presents a fully-digital-controlled shunt hybrid filter for damping of harmonic propagation in power distribution systems. The harmonic propagation is caused by resonance between line inductances and power capacitors installed for power factor correction. A possible solution to damping out harmonic propagation is based on installation of a shunt pure active filter at the end of a feeder. This paper proposes a shunt hybrid active filter characterized by series connection of a seventh-tuned LC filter per phase and a small-rated three-phase active filter. Like the pure filter, the hybrid filter is connected to the end bus of a feeder. The capacitor of the LC filter imposes a high impedance to the fundamental frequency, so that the fundamental voltage appears across the capacitor. This unique feature allows us to directly connect the hybrid filter to the 6.6-kV power line without step-down transformers. Furthermore, the capacitor used in this hybrid filter is lighter, cheaper and smaller than the transformer used in the pure filter. Theoretical analysis, along with experimental results obtained from a 200-V, 20-kW laboratory system, verifies the viability and effectiveness of the proposed hybrid filter.