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This study presents an improved means of direct power control (DPC) of grid-connected voltage-sourced inverters (GC-VSIs) when the network voltage is unbalanced. The DPC is based on sliding mode control (SMC) approach, which directly regulates the instantaneous active and reactive powers in order to keep the features of DPC without requirement of synchronous coordinate transformation or phase angle tracking of grid voltage. The behaviour of GC-VSIs by the conventional DPC, which takes no negative sequence voltage into consideration, is analysed under unbalanced network conditions. A new power compensation method is proposed for the SMC-based DPC during network unbalance to achieve three selective control targets, that is, obtaining sinusoidal and symmetrical grid current, removing reactive power ripples and cancelling active power ripples. The active and reactive power compensation components are calculated briefly and the proposed three control targets can be achieved, respectively, without the need for extracting negative sequence current components. Simulation and experimental results on a 1 kVA prototype GC-VSI are presented to verify the correctness and validity of the proposed control strategy and power compensation method.