A novel principle of transformer protection using equivalent instantaneous leakage inductance， based on the transformer model loop equation， is proposed. The winding deformation can result in the change of the parameters of leakage inductance during internal fault. No change， however， takes place under conditions of normal operation， external fault and magnetizing inrush current. Therefore， the operation states of transformer can be effectively distinguished by calculating the equivalent instantaneous leakage inductance. Two groups of dynamic experimental results have verified that the method proposed is free from the impact of inrush current and is capable of clearing the internal fault as well as the light fault quickly and reliably.