An efficient method for minimising real power losses and improving the voltage profile of large scale power systems is presented. The problem is solved through optimal adjustments of reactive power generation in the system by changing generator voltages, shunt capacitors, and tap setting of tap changing transformers. It is formulated in a linearised form suitable for the linear programming technique and decomposition methods. The power system planning and corresponding problems with the addition of new reactive power sources have been integrated with the operational characteristic of the system, and results have been presented. The proposed method does not require the inversion of the Jacobian matrix, and its superiority lies in the reduction of the computation time and memory space, as well as a fast convergence for the solution of large scale systems.