Abstract: The prime motto of present paper is to find out the enhancement of damping the power system oscillation through co-ordinated model of Static Synchronous Compensator STATCOM) situated in shunt with transmission line. This paper also stabilizer the linearized Phillips-Heffron model of a power system installed with a STATCOM and demonstrates the application of the model in anylizing the damping effect of the STATCOM and designing a STATCOM stabilizer to improve power system oscillation stability of single machine infinite-bus system by using MATLAB The effectiveness of proposed controller in damping the low frequency oscillations and hence improving power system dynamic stability have been identified via eigenvalues analysis and simulation result with different system conditions and under different line loading.