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IN A PREVIOUS PAPER,1 the basic theory and a procedure for optimum design of strictly digital systems were presented. In practice, however, strictly digital systems are few in number. Of far greater interest are digitally controlled continuous systems, in which a continuous plant is controlled by intermittently monitored and processed error signals. While only error signals at specific instants are used to control the system, the mean-square error averaged over all times is to be kept at a minimum. This paper develops the basic theory into a design procedure for doing this. The design procedure is no more complicated than that for a strictly digital system.