Stator core loss has significant adverse effects when an induction motor is controlled by the conventional vector control method. Therefore, taking core toss into account should make it possible to control the torque very precisely. This paper proposes a speed sensorless vector control method for an induction motor at optimum efficiency and high response taking core loss account. The proposed vector control system consists of a speed adaptive rotor flux observer which takes core loss into account and employs a direct vector control which compensates for the influence of core loss. Also, in this paper, a vector controlled induction motor with a deadbeat rotor flux controller is developed. The method ensures optimum efficiency in the steady state without degradation of the dynamic response. The validity of the proposed technique is confirmed by simulation results for induction motor drive system.