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A new active power filter with asymmetric inverter legs are presented to suppress harmonics, compensate reactive power and draw the balanced line current from the AC source under balanced and unbalanced load conditions. In the adopted control algorithm, a classical proportional-integral voltage controller and hysteresis current controller are used to maintain DC link voltage constant and to track line current commands. A voltage compensator is added in the control loop to compensate the neutral point voltage variation due to load variation. The system configuration and mathematical analysis are discussed in the paper. Finally, the experimental results based on a laboratory scaled down prototype are provided to verify the effectiveness and validity of the proposed control algorithm.