The extensive use of nonlinear loads in today’s world has inspired considerable research interest in the area of power quality improvement. This thesis proposes an integrated magnetics based compact solution which provides regulated, balanced and sinusoidal load voltage drawing sinusoidal and balanced currents from the grid. Thus, it supplies clean power to the load without polluting the grid. It consists of an EI shaped magnetic core and two compensators known as the series and shunt compensators. The series compensator ensures the quality of output voltage, where as the shunt one takes care of quality of the current drawn from the grid. The magnetic circuit acts as a common domain for interaction between the energy ports. It also provides galvanic isolation between the inverters, load and the grid. The magnetic circuit incorporates a virtual arm switching mechanism to have an option of connecting the inverters either in series or in parallel with each other depending on the requirements. During normal mode when the switch remains inactive, the series inverter is effectively in series with the load and the shunt inverter is effectively connected across the load. Therefore, the voltage source inverters can be independently controlled to serve the purpose of series and shunt compensation. The shunt inverter is always connected in shunt with the grid. The magnetic arm switch is activated during grid power failure. Then the switch ensures parallel connection of the inverters and the load. The inverters are controlled to share the load power according to the respective ratings. Thus the magnetic arm switching mechanism helps in improving the system reliability. The series inverter also can be connected in parallel with the shunt one in presence of the grid to supplement the shunt inverter by supplying harmonic and reactive currents. The design, modelling and implementation issues for single phase applications are considered first. A simple controller structure for this application is also discussed in the thesis. The individual compensation actions are then verified by simulation and experimental results. The three phase power quality compensator is in principle an extension of the single phase quality power supply. It is realized by combining three single phase units with minor modification in terms of windings. A more compact structure is also proposed wherein a single integrated magnetic circuit for the three phase application can be used. The composite magnetic circuit is modelled and designed considering a laboratory prototype. A synchronously rotating reference frame based controller structure for the series and shunt compensators are discussed. The control of the inverters in power sharing mode (with parallel connected inverters) are also proposed and discussed. Experimental and simulated results are presented to verify and validate the operation of this compensator in different operating modes. An effective improvement in the control dynamics is achieved for handling unbalanced and nonlinear loading without increasing inverter switching frequency and controller parameters. In other words, the modified control scheme can handle nonlinear and unbalanced loading with relatively slow proportional integral (PI) controllers. Suitable feed forward compensation terms corresponding to each harmonic component are added to the output of the PI controllers in order to achieve this effective improvement. Experimental results show good improvement in this regard (for both series and shunt compensations).