A comprehensive approach to the design of UPFC controllers (power-flow controller, DC-voltage regulator and damping controller) is presented. Studies reveal that damping is adversely affected by the incorporation of a DC-voltage regulator. Investigations were carried out to understand the relative effectiveness of modulation of the UPFC control signals m(B), delta(B), m(E) and delta(E) on damping of the system oscillations, using a controllability index. A dual damping controller based on simultaneous modulation of UPFC control signals m(B) and delta(E) is proposed. Investigations reveal that alternative damping controllers (damping controller m(B), damping controller delta(E) and dual damping controller) provide robust dynamic performance under wide variations in loading condition and system parameters.