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In RFID systems, some readers will suffer from RF interference, which can lead to reader collision. Consequently, an anti-collision algorithm based on distributed power control (DPC) scheme was proposed as a solution for the problem in this paper. The proposed algorithm dynamically adjusts power output of a RFID reader based on the signal-to-interference ratio (SIR) of RFID reader receiver, minimizes the reader collision ratio while maintaining a desired read range. The simulation results shown that the proposed algorithm reduces the collision ratio greatly while ensure overall coverage area of the RFID system.