In this paper, the conventional direct torque control (DTC) scheme for induction motor drives is extended to directly control the active power (DPC) delivered to the grid by a wind turbine driven squirrel cage induction generator (SCIG). The SCIG is interfaced to the grid through an AC-AC matrix converter. A constant switching frequency based direct power control scheme with flux and power controllers is proposed. A closed loop Luenberger observer and an adaptive speed estimator are used to estimate the torque, stator flux magnitude and phase, and rotor speed of the induction generator. The simplified carrier based modulation method is used to synthesize the pulse width modulated output voltages from the matrix converter and to control the power factor of the currents on the grid side. Simulation results are presented to support the theoretical discussion.