Voltage sags and swells are the major problems of the power distribution system that arise due to uneven distribution of the single-phase and nonlinear loads. They severely degrade the power quality and may cause the failure of the equipment at the user's side. The voltage sag and swell issues are compensated by operating the AC voltage controllers with bipolar voltage gain characteristics. In these converters, high switching voltage and current, and a large number of switching devices are the main issues that cause unwanted power losses and result in reduced efficiency of the system. High voltage stresses may cause device failure due to the increase in dv/dt rating. The large count of switching devices results in high cost and high conversion losses. So here, we propose a novel AC converter with fewer switching devices that reduces switching voltage and current to have low conversion losses. The amplitude of the output is governed through the direct PWM control (DPWM) of one switch that controls the switching state of the other switch indirectly called indirect PWM control switch (IDPWM). The detailed analysis of the proposed converter is carried out to compare its performance with the existing converters. MATLAB/Simulink environment-based simulation results are proved through the experimental results obtained by developing a hardware prototype. © 2013 IEEE.