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This paper presents an optimal multi-loop control structure for uninterruptible power supply (UPS) applications which use voltage source inverter (VSI) coupled with LC filter. A resonant controller ensures tracking of sinusoidal voltage reference and rejection of sinusoidal current disturbance with no steady-state error if the loop remains stable. The challenges are reduction of output total harmonic distortion (THD), improving damping of the LC resonance frequency and preventing generation of fast closed-loop modes which go beyond the frequency range of inverter with limited switching frequency. An extension of the classic linear quadratic regulator (LQR) is proposed which addresses the optimal tracking problem. The paper also presents an improved controller to further reduce the voltage distortions for highly accurate applications. The designed controller is simulated and also experimentally built and the results are presented to confirm analytical derivations.