The project entails simulating a model of a complete facts controller using statcom device and prototype hardware model of facts controller using statcom device. this involves the design of voltage source converter circuitry, control strategy for vsc, coupling (shunt) transformer, capacitor and passive harmonic filtering circuits. the complete model either converts ac power into dc power by vsc as a controlled rectifier or converts the dc power into ac power by vsc as a pwm converter, during the time of transient faults especially when there is any change in reactive power. this action is controlled automatically by the system. for the vsc, its ac output voltage is controlled such that it is just right for the required reactive current flow for any ac bus voltage dc capacitor voltage is automatically adjusted as required to serve as a voltage source for the converter. statcom can be designed to also act as an active filter to absorb system harmonics. the main objective of our project is deals with the reactive power compensation i.e. when reactive power in the power system is decrease then statcom will inject the reactive power in the power system network and when surplus reactive power available in power system is increase beyond some limit then statcom will absorb the reactive power. the capacitor will charged or discharged according to control logic applied to vsc in controlled rectifier mode or inverter mode as per the reactive power variation in power system. for prevention of large fluctuation in direct current due to variation in ac system voltage, maintaining direct voltage near rated value and prevention of commutation failure in inverter, we use the pwm method for the firing of the vsc. simulation of complete statcom device for 415 v, 10a, 50 hz system is done in matlab 2009b software. the gate firing using the pulse width modulation scheme has been simulated to observe their relative advantages and disadvantages. by using micro-controller, complete statcom device and gate firing units are implemented in hardware model. thus, complete working model of prototype statcom device is developed using the basic concepts and appropriate circuitry.