Maintenance of power factor in an industrial load bus within a specified limit is essential for economic utilisation of power. The concept of parallel processing of microprocessors has been utilised to develop an on-line power factor regulator comprising static VAR compensator along with a dynamic VAR compensator (synchronous condenser). A software algorithm has been developed for power factor regulation during steady state as well as during persistent power factor deviation at the load bus. In case of higher power factor deviation, the system software also allows the dynamic compensator to compensate effectively over static compensator for allowable power factor operation. A prototype model has been developed and experimented on a simulated longitudinal power supply system consisting of mixed load in the laboratory to observe the efficacy in controlling the load bus power factor within recommended limits.