A circuit topology is proposed for single-phase on-line UPS systems. The proposed circuit incorporates a built-in bidirectional converter which provides power factor correction and active power filtering. The input stage, based on a bidirectional full-bridge converter, functions as a rectifier with unity power factor correction for normal ac line mode operation, and as an active power filter for outage mode operation. During input power failure, the DC/AC inverter output stage supplies real power from the battery bank to the critical load. Simultaneously, the bidirectional AC/DC converter functions as an active power filter, providing reactive power to the load. Thus, the real power capability is improved compared to conventional on-line UPS. Simulation of the proposed topology shows, for normal mode, a well regulated sinusoidal output voltage with minimum harmonic distortion for nonlinear loads, near-unity power factor and low-harmonic current for ac line. For outage mode, simulation shows a sinusoidal output voltage with low total harmonic distortion and a near-unity output power factor with a high utilization factor. Simulation results confirm the feasibility and features of the proposed UPS scheme.