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This paper advances a novel method for power quality monitoring by using integer lifting wavelet transform (ILWT). ILWT based wavelet uses time domain for its integer calculation and could lessen calculation complexity due to its structure, compared with modified wavelet transform (MWT) and wavelet transform (WT) which depends on floating point coefficients. The whole method is tested over sample disturbances like voltage sag, voltage swell and harmonics. As shown by the simulation experiment results, the proposed approach displays a good decomposition of various power quality waveforms. The hybrid active filter is modeled using P-Q theory and simulation studies are performed using MATLB software. The simulation results, the proposed approach displays a good reduction in harmonics in comparison with passive filter, active filter and hybrid active filter.