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In this paper, a novel control system is proposed to control the active and reactive grid power flow in a three phase grid connected PV inverter. The control system not only controls the grid power but also reduces the grid current THD in the presence of typical non-linear loads in parallel with grid at the point of common coupling (PCC). The proposed control system also takes care of not only the grid voltage unbalance but also the unbalance in the connecting line side inductors. The stability of the proposed control system is ensured by the direct method of Lyapunov. The proposed control system is not only simple to implement in the digital form but also provides superior performance over the conventional multiple PI or resonant control methods. A new grid connected inverter modeling technique is also proposed to take care of unbalances in the inverter system. Experimental results are provided to show the efficacy of the proposed control system.