An improved control method for a dual mode compressor drive arrangement selectively operates an electric machine coupled to the compressor as a motor or a generator during operation of an engine coupled to the compressor for improved efficiency and performance. The machine is operated as a generator to increase the available power for vehicle electrical loads when compressor operation is not needed or when the engine is driving the compressor. Conversely, the machine is operated as a motor to drive the compressor under heavy engine loading or when the engine speed is outside a desired operating range defined in terms of compressor speed.