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Design and implementation of a novel on-line single-phase power factor measurement technique under non-sinusoidal and time-varying environments are presented. The proposed method expresses true power factor in terms of displacement and distortion power factors under certain significant facts, as defined in IEEE Std. 1459-2000. The displacement power factor is evaluated using a unique digital signal-processing algorithm, whereas discrete wavelet transform (DWT) based multi-resolution analysis has been proposed for an accurate estimation of distortion power factor. An efficient algorithm to perform DWT in real time, using Texas Instruments TMS320VC5416 digital signal processor, has also been discussed. Illustrative laboratory test results confirm the validity and accurate performance of the proposed method for tracking true power factor under both static and dynamic situations.