A new computationally efficient error adaptive first-order eigen-perturbation technique for real-time modal identification of linear vibrating systems is proposed. The existence of error terms in the approximation of the eigenvalue problem of response covariance matrix in a perturbative framework often hinders the convergence of response-only modal identification. In the proposed method, the error in first-order eigen-perturbation is incorporated using a feedback, formulated by exploiting the generalized eigenvalue decomposition of the real-time covariance matrix of streaming response data. Since the incorporation of the higher-order perturbation terms in the total perturbation is mathematically challenging, the proposed feedback approach provides a computationally efficient framework yet in a more elegant manner. A new criterion for the quality of updated eigenspace is proposed in the present work utilizing the concept of diagonal dominance. Numerical case studies and validation using a standard ASCE benchmark problem have shown applicability of the proposed approach in faster estimation of real-time modal properties and anomaly identification with minimal number of initially required batch data. The applicability of the proposed approach toward real-time under-determined modal identification problems is demonstrated using a real-time decentralized framework. The advantage of rapidly converging online mode-shapes is demonstrated using a passive vibration control problem, where a multi-tuned-mass-damper (MTMD) for a multi-degrees-of-freedom system is tuned online. An extension for online retuning of the detuned MTMD system further demonstrates the fidelity of the proposed algorithm in online passive control.