We propose a scheme to implement variable coupling between two flux qubits using the screening current response of a dc Superconducting QUantum Interference Device (SQUID). The coupling strength is adjusted by the current bias applied to the SQUID and can be varied continuously from positive to negative values, allowing cancellation of the direct mutual inductance between the qubits. We show that this variable coupling scheme permits efficient realization of universal quantum logic. The same SQUID can be used to determine the flux states of the qubits.
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