This paper proposes a novel, cost effective grid-connected inverter for a domestic micro combined heat and power (micro-CHP) system. A high frequency (~12,000 rpm), high voltage (~425 Vdc) brushless DC (BLDC) machine is used as the generator. The output of the generator is injected into the grid through a novel grid-connected inverter, utilizing a digital algorithm for the implementation of a constant frequency hysteresis current control. This allows a simplified output filter with smaller components to be employed. A grid synchronization method has also been designed, based on a low-pass filter and a micro-controller to optimize/tune the output power factor. The proposed method is successfully applied to a 500 W, 230 V, 50 Hz grid-connected voltage source inverter (VSI) prototype, where the output of the VSI has been demonstrated to comply with the operating regulations of the domestic distributed power generation systems.