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An algorithm is presented for efficient computation of electromagnetic interactions between a large number of sources in electrically small problems. The algorithm is based on a plane-wave expansion of the free-space Green's function. The expansion consists of both propagating and evanescent plane waves, and is stable at low frequencies. The algorithm is used in the iterative solution procedure of the method of moments to reduce the computational complexity of solving the matrix equation. It reduces the complexity of the matrix-vector multiplication from O(N2) to O(N log N). The numerical results verify the validity and efficiency of the algorithm in solving large-scale and low-frequency problems.