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Abstract — A hybrid compensator which is a combination of a three phase four wire shunt active power filter and a parallel passive filter has been presented in this paper. The dominant lower order harmonics as well as reactive power can be compensated by passive elements whereas the active part mitigates remaining distortions and improves the power quality. Modified phase lock loop based synchronous reference frame control strategy is adopted here for active filtering system. The proposed three phase hybrid line conditioning system can be quite effective for recompensing harmonics, reactive power & neutral current under unbalanced grid conditions. The simulated results obtained by MATLAB/SIMULINK power system block set are examined in detail for the validity of suggested approach. A laboratory prototype has been built on dSPACE1104 platform to verify the feasibility of the suggested SHAPF controller. Index Terms — Active power filter (APF); phase locked loop (PLL); harmonics; power quality; synchronous reference fram