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Voltage sags are an important power quality problem for which the dynamic voltage restorer (DVR) is known as an effective device to mitigate them. This paper presents a new control algorithm for dynamic voltage restorer (DVR) that mitigates voltage sag by low active power injection with short time delay. This work is based on two-vector control technique using 12 pulse inverter. A smooth control technique using in-phase compensation method is presented. The proposed control method is tested on an 11 kV distribution system. In the control system, the DVR detects and tracks the phase angle of the supply voltage and produces a reference voltage signal from the rated load voltage magnitude. At any phase shift, the phase angle of the reference voltage is adjusted to track the phase angle of the supply voltage. The difference between the reference and measured voltage is injected to the line by the DVR. A phase locked loop is used to keep the load voltage synchronized continuously and track the source voltage. It is shown that the proposed method improves the performance of the DVR. The system stability depends on the dead-beat gains used in the control algorithm to provide very fast response. Photovoltaic (PV) source with a boost converter are included to support the DC source during voltage sag.