Micro Combined Heat and Power systems or microCHP systems generate heat and electricity for a home. Stirling engines are widely used as prime movers in microCHP applications. Stirling engine is an external combustion engine having an enclosed working fluid (as helium) that is alternately compressed and expanded to operate a piston. The displacer shuttles the working fluid between the hot and cold ends. The piston is coupled to a transmission and to an electrical machine to generate power. Conventional Stirling engines are not controllable to a great degree. The piston and displacer are connected to the same crank and they maintain the same phase difference throughout the cycle. Also the piston and displacer are normally constructed to move in a sinusoidal fashion. The Active Stirling Engine is a new concept introduced in this thesis which has a free displacer. The displacer is driven separately compared to a coupled drive in conventional Stirling engines. The displacer motion can be non-linear with dwell at each ends of the stroke, opening up the possibilities to increase the pressure volume diagram which indicates the work done by the engine. A separately driven displacer also allows introducing phase control and stroke control to improve the controllability of a Stirling engine. This thesis examines the effect of non-linear displacer motion and phase control of the displacer on Stirling engine performance. Simulations are performed in Sage, the leading Stirling engine simulation software, to understand the effect of displacer phase control. A test rig is constructed with the actively controlled displacer connected to a linear machine controlled by a programmable servo. Heat is applied to the test rig though an electric heating coil. The test rig is charged with nitrogen at 20Bar pressure. The power piston is connected to a rotating electrical machine via the transmission. The rotating electrical machine is used to start the engine and to act as the generator. The test rig is instrumented to determine the linear position of the displacer and piston, angular position of the rotating electrical machine shaft, temperatures, pressures and flow. A LabVIEW™ based data acquisition system is set up to capture data from the test rig. Data is collected at various test cases. The simulation result is compared against post processed data. An efficiency improvement of 15% is achieved using this method and is demonstrated experimentally. Applications in micro combined heat and power systems utilising the improved efficiency due to non linear motion and controllability due to phase control are explored in this thesis.