The tremendous power flow may be transfered when two-phase short line is shut down, which may result in unstable state of the system and large loss of electric power. A novel line fault current controller (LFCC) and control method for the fault current of the two-phase short are presented. LFCC, emdedded at the line terminal, is composed of a series-connection transformer, a shunt-connection transformer,2 controllable inductors and on-line taps and is equivalent to the series of the insertion voltage and the insertion inductor when it works. The insertion voltage at the sending terminal(receiving terminal) is controlled to lead (lag)the fault source voltage by 2π/3 by adjusting on-line taps states. Because the insertion voltage amplitude and the insertion inductance can be controlled independently, the fault current gets zero and the current through the fault line reaches the normal current by the appropriate control of the insertion voltage amplitudes and the insertion inductances. Therefore, the fault line keeps the operation and the current through the line during the two-phase short existing equals that in normal operation, which improves the supply reliability. In addition, the corresponding control strategy for two phase short current is proposed. The experiment results show that the proposed LFCC is able to control the fault current through the line to reach corresponding normal current. The proposed control method suited for the proposed LFCC for the two phase short current is verified with the simulation results.