Wide-area measurement systems enable the wide-area damping controller (WADC) to use remote signals to enhance the small signal stability of large scale interconnected power systems. System operating condition variations and signal transmission time delays are the major factors to worsen the damping effect and even deteriorate the system stability. This paper proposes a novel measurement-based adaptive wide-area damping control scheme using oscillation mode prediction and system identification techniques. These techniques adjust the parameters of WADC as well as the time delay compensation in an online environment. To achieve fast online implementation, an identified high order multi-input multi-output (MIMO) model is deformed into a low order single-input single-output (SISO) model according to the residue of MIMO model. The SISO model can accurately represent the power system dynamics in the form of a transfer function, capturing the dominant oscillatory behaviors in the frequency range of interest. Moreover, the WADC has been implemented on a hardware test-bed (HTB) by adding its output signal to the excitation system of a selected generator. The effectiveness of the proposed measurement-based adaptive WADC has been demonstrated in a two-area four-machine system on the HTB under various disturbance scenarios.