A system and method for limiting current oscillation in power supplies. A method for operating a power supply comprises entering a current limitation mode, setting a current limit for a current flowing through a power switch of the power supply, and in response to determining a current limit has changed from a high value to a low value or detecting an occurrence of a fault condition, setting the current limit to the low value, and locking the current limit so that the current limit does not change. The method further comprises providing a current to a load coupled to the power supply.