ABSTRACT In today’s fast-changing power systems, it is vital to have a protection system that can distinguish between power swing and fault conditions. With advanced protective devices (Digital Relays), an appropriate protection strategy can be established to identify power swing and fault conditions individually. The proposed algorithm uses the sliding window concept, which requires very little computational data unless any abnormal conditions exist in the power system. Modified Full Cycle Discrete Fourier Transform (MFCDFT) is more effective in the extraction of the fundamental phasors from the original complex signal by effectively removing the harmonics and DC components. An adaptive impedance characteristic-based MFCDFT is utilized for the discrimination of power swing and fault in this work. Several fault scenarios and power swings are generated on the test system concurrently and independently from the relay station at varied distances. PSCAD/EMTDC is utilized on a single-machine infinite bus system to analyze various test conditions. The simulation is utilized in this case to collect data from various test circumstances. After obtaining the data, the MFCDFT algorithm along with adaptive impedance estimation is performed using MATLAB code. After examining various test results, it is discovered that the suggested technique correctly recognizes power swings and various fault scenarios. It can also identify the difference between stable and unstable power swings. According to the results, the proposed technique is proficient at spotting fault and power swing conditions. In addition, the algorithm ensures dependable operation with quick detection and avoids maloperation under a typical swing condition.