Power quality is the most important problems in power system automation. Aim to analysis and improve the power quality, many types of power quality events, such as voltage unbalanced, harmonic, frequency offset and multiple short time power quality disturbances, should be recorded accurately. This paper proposed a new design proposal of a novel digital fault recorder which could record the power quality waveform signals in 24 hours a day. The original power quality signals are transformed by fast Fourier transforms (FFT) and the waveform distortion is determined by the amplitude spectrum. In order to compression the data of power quality signals, the waveform without distortion is described by the first circle’s waveform. Hence, every power quality events signals and stationary signals will be recorded by one circle signal of each time. Then, the first circle signals of each event are compressed by wavelet transform so as to get higher compression ratio. The signal compressed by DFR will be stored in the Flash or RAM chips and transferred to principal computer. The data will be used for power quality analysis.