Nuisance fuse blowing because of miscoordination between fuse and recloser in power distribution network is very critical issue particularly when distributed generations (DGs) are incorporated. This study presents a new adaptive digital relaying scheme for power distribution network containing DG, which circumvents miscoordination between recloser and fuse. It is based on calculation of the ratio of feeder current and recloser current. With the help of this philosophy, the proposed scheme automatically modifies the time dial setting of the relay and hence enhances margin between fuse and recloser in order to avoid miscoordination between fuse and recloser. The proposed scheme has been extensively tested for various types of faults in radial distribution network containing DG. Fault data are generated by modelling an existing part of 11 kV Indian power distribution network using PSCAD/EMTDC software package. Furthermore, the impact of different DG capacities on the margin (coordination) between fuse and recloser are also analysed. It has been observed that the proposed scheme maintains proper coordination between fuse and recloser for all types of fault. Moreover, it also provides satisfactory operation during high resistance single line-to-ground faults.