The high integration of inverter-interfaced distributed generation, in particular photovoltaic systems into the conventional low voltage distribution network has imposed several challenges on the operation of the existing protection system which is mainly based on overcurrent principle. In order to take the advantage of distributed generation, the network that is so called microgrid should be able to operate in both modes named grid-connected and islanded. However, the low level of fault currents in islanded mode of operation is not sufficient for the present overcurrent based protective devices to operate. Moreover, the delay in fault clearance degrades the voltage level of the network, resulting in the undesired disconnection of PV systems in unaffected areas. This, in turn, will inversely affect the possibility of islanding. Thus, the paper proposes a new protection strategy that can ensure the safety operation of microgrid in both operation modes and also revises the anti-islanding protection of the connected PV systems so as to prevent them from unnecessary tripping.