The paper develops a method of minimizing power transmission losses by optimum control of reactive power flow. In the past, because the optimizing method considers as the first step the minimization of node voltage deviations and as the second step the minimization of transmission losses within the system, the calculating procedure was more complex and difficult to handle. In this paper, a new computing method for real time control on a digital computer is described which aims at a coordinated use of reactive power sources and voltage regulating devices. The power transmission losses are minimized by a gradient method while satisfying the constrained system voltage conditions and sensitivity parameters are the basis of the method.