This paper proposes a novel topology along with a switching strategy for AC/AC conversion with a high frequency transformer link. The input side converter is a three phase to single phase direct link matrix converter switched with a simple triangle comparison based novel PWM strategy and provides input power factor correction. This PWM technique also helps to eliminate the effect of the pulsating DC bus seen by the output inverter. The high frequency transformer provides flexible voltage transfer ratio along with galvanic isolation and has much reduced size compared to the bulky line frequency transformer. The centre tapped secondary of the transformer along with a single phase rectifier provide the required voltage levels for a three level inverter. This inverter is operated as a two level inverter in order to eliminate common mode voltages at its output. A novel variable slope carrier is used for this inverter in order to nullify the effect of fluctuating DC bus. The major advantages of this scheme are a) elimination of DC bus capacitor, b) low neutral point fluctuation, c) isolation, d) input power factor correction e) flexible voltage transfer ratio and f) high power density. The proposed configuration is simulated and simulation results are presented, which verifies the operation.