Various methods of providing VAR injection have been used to compensate the inductive current in power distribution feeders. Some were based on the optimization of the location and the rating of the compensators by minimizing the resistive losses. However, these methods were limited and their range and benefit reduced due to the approximation of the reactive load profile using a single or a limited multi-level model. This paper describes the design and the testing of a compensator that continuously. adapts to the inductive current in the feeder, ensuring a maximum reduction of the resistive power losses at all levels of inductive load for a singly located compensator. The system is based on a microprocessor controlled susceptance consisting of a fixed inductor in series with a thyristor biased by a fixed capacitor in parallel. By adjusting the firing angle of the thyristor in series with the inductor, a continuously controlled compensator is obtained. A detailed analysis of the harmonics and the means For their suppression are presented. The analysis have been verified experimentally by designing and fabricating a suitable system in which the modelled feeder is tested in a laboratory environment. Good agreement is obtained between the analysis and the experimental results. The results of the application of a simplified version of the compensator to a real feeder are also presented.