The objective of this work is to research on a SVC auto-compensation method to improve the power factor of the power supply system. Firstly, the principles of the reactive power compensation of FC+TCR are analyzed qualitatively. According to the deficiencies of this compensator, a novel SVC auto-compensating method based on the variable reactor is presented. The reactor controlled by anti-parallel thyristors is namely as the variable reactor in this method. The secondary-side equivalent inductance of the variable reactor is varied by adjusting the SCR firing angles. And then, the equivalent inductance of the variable reactor of the compensator branch is adjusted indirectly for compensating the corresponding reactive power after the working conditions of the load are changed. Therefore, the auto-compensating of this var compensator is realized. The auto-compensating principles of this compensator have been analyzed, and a research on the compensating parameters of this compensator is given emphatically in this paper. Finally, the essential operation steps of this SVC compensation method are given. The research of this paper has laid a theoretical foundation for this compensator in industrial applications.