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This paper presents the development of a prototype module for DSP based distribution static Var compensator (DSTATCOM) to compensate unbalanced and non-linear load in power system. A digital signal processor starter kit TMS 320F2812PGFA is chosen due to its analog/digital input-output compatibility, fast processing speed and cost effectiveness to implement the shunt algorithm based on instantaneous symmetrical component theory. The design details of logic circuits and power circuits are presented. The experimental studies are carried out and the results are discussed.