This paper proposes a new approach of Field Programmable Gate Array (FPGA) controlled digital implementation of shunt active power filter (SAPF) under steady state and dynamic operations. Typical implementations of SAPF uses microprocessor and digital signal processor (DSP) but it limited for complex algorithm structure, absence of feedback loop delays and their cost can be exceed the benefit they bring. In this paper, the hardware resources of an FPGA are configured and implemented in order to overcome conventional microcontroller or digital signal processor implementations. This proposed FPGA digital implementation scheme has very less execution time and boosts the overall performance of the system. The FPGA controller integrates the entire control algorithm of an SAPF, including synchronous reference frame transformation, phase locked loop, low pass filter and inverter current controller etc. All these required algorithms are implemented with a single all-on chip FPGA module which provides freedom to reconfigure for any other applications. The entire algorithm is coded, processed and simulated using Xilinx 12.1 ISE suite to estimate the advantages of the proposed system. The coded algorithm is also defused on a single all-on-chip Xilinx Spartan 3A DSP-XC3SD1800 laboratory prototype and experimental results thus obtained match with simulated counterparts under the dynamic state and steady state operating conditions.