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Because of its strong inherent safety, the modular high temperature gas-cooled nuclear reactor (MHTGR) has been regarded as the central part of the next generation nuclear plants (NGNPs). Power-level control is one of the key techniques which provide safe, stable and efficient operation for the MHTGRs. The physically-based regulation theory is definitely a promising trend of modern control theory and provides a control design method that can suppress the unstable part of the system dynamics and remain the stable part. Usually, the control law designed by the physically-based control theory has a simple form and high performance. Stimulated by this, a novel nonlinear dynamic output feedback power-level control is established in this paper for the MHTGR based upon its own dynamic features. This newly-built control strategy guarantees the globally asymptotic stability and provides a satisfactory transient performance through properly adjusting the feedback gains. Simulation results not only verify the correctness of the theoretical results but also illustrate the high control performance.