A system and method for security oriented optimal placement of phasor measurement units in a power system, said system comprises: transient stability analysis module adapted to obtain observed parameter values for pre-defined contingencies for said power system; fuzzy logic controller module adapted to identify the critical buses in said power system; and integer linear programming module adapted to identify minimum number of phasor measurement unit placement sites, where, critical buses are observed either for at least two times or by ensuring placement of phasor measurement unit at the critical bus location.
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