The interest in renewable energy and Combined Heat and Power (CHP) is expected to lead to a continuous increase in Embedded Generation (EG) directly connected to the distribution network. In order to maximise the benefits from EG, it is expected that islanding operation will be allowed in the future. This paper discusses the dynamic behaviour of induction generators (widely used in EG) connected directly to the grid, during disconnection and reconnection to the grid. Direct connection of induction generators is used in EG, such as micro CHP and some wind turbines. Results showed that self-excited induction generators experience a serious voltage regulation problem when the load and speed change. Results from simulation and experimental analyses showed that it is necessary to control the real and reactive power in order to maintain the generator terminal voltage and to avoid high in-rush current during reconnection.