This paper presents a novel and easy to implement control strategy for unified power quality conditioner (UPQC). This control strategy is usable in three-phase three-wire utilities. The control strategy of parallel active filter (PAF) is based on combination of extended p-q theory and instantaneous symmetrical components theory while the control circuit of series active filter (SAF) is based on instantaneous symmetrical components theory. The problem of generating three phase imbalance reference currents of extended p-q theory has been solved. Operation of PAF using this method compensates for reactive power, current harmonics and imbalance currents while operation of SAF compensates for voltage imbalance and voltage harmonics. The operation of control circuit is explained using analytical analysis. The validity of operation of control strategy is studied through simulation results.