In this study, a bilateral teleoperation control algorithm is developed in which the model-mediation method is integrated with an impedance controller. The model-mediation method is also extended to three-degrees-of-freedom teleoperation. The aim of this controller is to compensate for instability issues and excessive forcing applied to the slave environment stemming from time delays in communication. The proposed control method is experimentally tested with two haptic desktop devices. Test results indicate that stability and passivity of the bilateral teleoperation system is preserved under variable time delays in communication. It is also observed that safer interactions of the slave system with its environment can be achieved by utilizing an extended version of the model-mediation method with an impedance controller.