Drag-free spacecraft (SC) have gained attention in recent years for their application in missions requiring ultra-high stability. This paper presents a novel approach to address the problem of test mass (TM) capture in drag-free SC. Specifically, we propose a new continuously variable bandwidth scheme to improve the observer estimation accuracy and alleviate the peaking phenomenon. In addition, a state feedback controller based on variable-bandwidth extended state observer (VBESO) is designed and applied to Project “Taiji” for test mass capture. The results demonstrate the effectiveness of the proposed method in meeting the project’s performance requirements and achieving good transient performance.