This paper presents a new and simple method for sensorless operation of matrix converter drives using a constant air-gap flux and the imaginary power flowing to the motor. To improve low-speed sensorless performance, the non-linearities of a matrix converter drive such as commutation delays, turn-on and turn-off times of switching devices, and on-state switching device voltage drop are modelled using PQR transformation and compensated using a reference power control scheme. The proposed compensation method is applied for high performance induction motor drives using a 3 kW matrix converter system. Experimental results are shown to illustrate the feasibility of the proposed strategy.