The circulating currents in delta side of wye-delta connected three-phase power transformer can not be easily measured. So the current phase compensation method has to be considered for differential protection. However， the differential currents cannot really and truly reflect the exciting currents of transformer no matter what kind of current phase compensation methods is used. It also limits the application of a novel algorithm based on the equivalent instantaneous inductance to identify the inrush. How to obtain the circulating currents in delta side has become a difficult problem in transformer protection. Based on the voltage loop equations of transformer， a formula for calculating the equivalent instantaneous resistance and leakage inductance of winding is deduced. And then， a novel algorithm for calculating the circulating currents in delta side of wye-delta connected three-phase power transformer is proposed. Finally， simulation results with MATLAB verify the accuracy of this algorithm.