This paper presents an enhanced, yet simple, control strategy for a single-phase voltage-source utility interactive system (UIS). The UIS utilizes a third-order T-filter at the output of the power inverter. The control scheme employs the utility line current along with an observer circuit to estimate the filter capacitor voltage and current in the power circuit. These estimated variables are employed in the control circuit such that their actual values are made to follow predefined reference sinusoidal waveforms. Appropriate feed-forward controllers are designed employing the power circuit small-signal dynamic model. It is shown in the paper that this control scheme provides stable and successful feedback operation of the UIS with only one feedback control loop. Computer simulation results show that the scheme produces a utility line current with ultra low total harmonic distortion (THD). The scheme has fast dynamic response and is capable of feeding the utility line current at any desired power factor. Moreover, the control strategy improves the system immunity to switching noise and the system lends itself to weak as well as large AC network applications.