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Application of wavelet transform technique to high impedance arcing fault detection in distribution networks is presented. Phase displacement between discrete wavelet coefficients calculated for zero sequence voltage and current signals at natural network frequency is tracked. The developed wavelet based HIF detector has been tested with EMTP-ATP generated signals, proving better performance than traditionally used algorithms and methods. The protection method proposed is efficient, robust and may be used for HIF detection independently of the network neutral point grounding mode.