In this paper, we propose a new control algorithm to reduce the capacity of a previously proposed smart charger for electric vehicles (EVs) on single-phase three-wire distribution feeders with reactive power control. The basic principle of the proposed control algorithm is discussed in detail. It is shown that controlling the reactive power on the source side reduces the capacity of the previously proposed smart charger. A digital computer simulation is implemented to confirm the validity of the proposed control algorithm using PSIM software. A prototype experimental model is also constructed and tested. Experimental results demonstrate that balanced source currents with a power factor of 0.9, which is acceptable for Japanese home appliances, are obtained on the secondary side of the pole-mounted distribution transformer during both the battery charging and discharging operations in EVs. This reduces the capacity of the smart charger by 32% compared with that of the smart charger with the previously proposed control algorithm.