In this paper, a new single phase voltage sag/swell compensator using direct power conversion is proposed. A new compensator consists of input/output filter, series transformer and direct ac-ac converter, which is a single-phase back-to-back PWM converter without dc-link capacitors. Advantages of the proposed compensator include: simple power circuit by eliminating dc link electrolytic capacitors and thereby, improved reliability and increased life time of the entire compensator; simple PWM strategy or compensating voltage sag/swell at the same time and reduced switching losses in the ac-ac converter. Further, the proposed scheme is able to adopt simple switch commutation method without requiring complex four-step commutation method that is commonly employed in the direct power conversion. Simulation and experimental results are shown to demonstrate the advantages of the new compensator and PWM strategy. A 220V, 3kVA single-phase compensator based on the digital signal processor controller is built and tested.