A classical linear control system of the SM is based on PI current controllers. Due to SM nonlinearity, with such control system, it is not possible to obtain independent torque and flux control. To overcome this obstacle, a nonlinear control system can be used. Due to unknown damper winding state variables, an observer has to be made. In this work, observers for damper winding currents and damper winding fluxes are presented. Then, based on nonlinear theory, control law with feedback linearization method is obtained. Also, a comparison of the proposed and classical control system is done. For the classical control system, field-oriented control with internal model and symmetrical optimum principles is used. To verify the proposed algorithm, extensive simulation analysis of voltage source inverter drive is made. Processor in the loop testing has been also done.