This paper has investigated the speed sensorless indirect vectorcontrol of a two-phase induction motor to implement adjustable-speed drive for low-power applications. The sliding mode observer estimates rotor speed. The convergence of the nonlinear time-varying observer along with the asymptotic stability of the controller has been analyzed. To define the control action which maintains the motion on the sliding manifold, an "equivalent control" concept is used. It has been simulated and implemented on a sensorless indirect vector drive for 150W two-phase induction motor. The simulation and experimental results demonstrate effectiveness of the estimation method.