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The dynamic variation of rotor resistance due to the skin effect in a deep-bar induction motor has been modelled. A simulation of the motor including the skin effect, driven by a vector controller, has been developed in order to investigate the degradation of performance caused by the dynamic error in rotor resistance and hence rotor time constant. Due to the dependency of the vector algorithm on an accurate knowledge of the rotor time constant, even a relatively small error of 5% introduced dynamically due to the skin effect causes noticeable degradation of the system performance. A simple nonlinear compensation scheme has been proposed which reduces this error to less than 1% while placing a minimum additional computational burden on the controller.