This paper proposes a simple current error space vector based hysteresis controller for two-level inverter fed Induction Motor (IM) drives. This proposed hysteresis controller retains all advantages of conventional current error space vector based hysteresis controllers like fast dynamic response, simple to implement, adjacent voltage vector switching etc. The additional advantage of this proposed hysteresis controller is that it gives a phase voltage frequency spectrum exactly similar to that of a constant switching frequency space vector pulse width modulated (SVPWM) inverter. In this proposed hysteresis controller the boundary is computed online using estimated stator voltages along alpha and beta axes thus completely eliminating look up tables used for obtaining parabolic hysteresis boundary proposed in [19]. The estimation of stator voltage is carried out using current errors along alpha and beta axes and steady state model of induction motor. The proposed scheme is simple and capable of taking inverter upto six step mode operation, if demanded by drive system. The proposed hysteresis controller based inverter fed drive scheme is simulated extensively using SIMULINK toolbox of MATLAB for steady state and transient performance. The experimental verification for steady state performance of the proposed scheme is carried out on a 3.7kW IM. © 2010 IEEE.