By thermal oxidation of 4H-SiC at 1150-1300 degrees C, the Z(1/2) and EH6/7 concentrations can be reduced to below 1 x 10(11) cm(-3). By the oxidation, however, a high concentration of HK0 center (E-V + 0.78 eV) is generated. Additional annealing in Ar at 1550 degrees C results in elimination of the HK0 center. Thus, all the major deep levels can be eliminated by the two-step thermal treatment. Based on the depth profiles of deep levels, a model for the defect generation and elimination is proposed. The carrier lifetime in 4H-SiC epilayers has been improved from 0.64 (as-grown) to 4.52 mu s by this method. (C) 2009 The Japan Society of Applied Physics