JDP_V4_N4_RP2 Suribabu Sanker Ram Journal on Digital Signal Processing 2322–0368 4 4 8 16 Differential Protection, Power Transformer, Wavelet Packet Transform, Inrush Current, Internal Fault One of the most expensive apparatus in a power system network is the Power Transformer, which needs a continuous monitoring of its health such that the system performs efficiently. Modern power transformer is one of the most vital devices of the electric power system and its protection is critical. For this reason, the protection of power transformers has taken an important consideration by the researchers. This paper details a unique algorithm adopting wavelet packet transform method which separates the special features between magnetizing inrush and fault current, of differential current in a differential protection of a three phase transformer The performance of the proposed technique is verified under a variety of fault conditions on a typical IEEE system which is used for testing and verifying the results. Thus the proposed method is found to be fast and accurate. October - December 2016 Copyright © 2016 i-manager publications. All rights reserved. i-manager Publications http://www.imanagerpublications.com/Article.aspx?ArticleId=8311