Inverter interfaced distributed generation units contribute limited fault current and thereby the current magnitude-based protection schemes find limitation for such situations. Change in penetration level of renewable energy sources with time makes available protection schemes more challenging. The distinction between load and fault current is an issue and with high resistance fault, level of fault current and load current becomes comparable. In this paper, local measurement-based protection technique is proposed that uses current and voltage signals to derive accurate protection decision for a distribution system in the presence of distributed generation units. The method uses real and reactive power calculated at the relay point for the decision. The performance of the algorithm is tested for a 33 bus distribution system simulated using DIgSILENT PowerFactory. Considering such units, the method is tested for both islanded and grid-connected modes, the varying level of distributed generation penetration and for different fault resistances. The results demonstrate the strength of the proposed method over available techniques. The proposed method is also validated using hardware-in-loop testing using Arduino NANO microcontroller and OPAL-RT simulator in real-time.