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For pt.I see ibid., vol.1, p.76-80 (2002). In this paper, the interconnected model of an n-machine power system with FACTS devices installed, proposed by the authors in part I, is used to implement a decentralised/hierarchical control architecture. Such architecture allows damping in a very effective way the power system interarea oscillations obtaining a considerable improvement of the dynamic stability of the interconnected power system. The proposed architecture is tested on the IEEE three machine power system with a STATCOM installed obtaining good results.