Analysis of the effect of distributed generation (DG) capacity and location on voltage stability enhancement of distribution networks is presented in this paper. The analysis is performed using a steady state voltage stability index which can be evaluated at each node of the distribution system. Different optimal capacities and locations are used to check this effect. The location of DG has the main effect on the system voltage stability. Voltage stability should be taken into account as one of the objectives of DG optimal allocation techniques. The analysis is conducted on a 69 node distribution system.