Tar formation in biomass gasification is a major problem which in subsequent stages decomposes under the conditions such as temperature, pressure drop, gas flow rate, and retention time. Crucial review of literature discloses that all existing systems have maximum 90% tar removal capability. However, an exemption, catalytic crackers have efficiency in the range of 90% to 95%, but it operates at very high temperatures. Considerable efforts have been directed to develop an efficient hybrid filter system and evaluate its performance characteristics that operate in a low temperature range of 41–60 °C. The potential of proposed hybrid filter for producing tar-free fuel gas is analyzed here. The performance of developed compact hybrid filter was successfully tested with a 20 kW open core downdraft gasifier. The concept of hybrid compact filter presented in this study is first of its kind and it claims maximum tar reduction rate than any other system reported and its magnitude varies from 92% to 96%. Moreover, the experiments reveal that the tar and particulate content are converged to 52 mg/Nm3 from an initial range of 1428 mg/Nm3 and further substantiate that proposed filter system is reliable, economical, eco-friendly, and greatly useful for biomass industry applications.