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This paper presents an improved particle swarm optimization algorithm (IPSO) to optimal reactive power dispatch and voltage control of power systems. The improved particle swarm optimization approach uses more particles' information to control the mutation operation. The convergence property of the proposed IPSO is analyzed using standard results from the dynamic system theory and guidelines for proper algorithm parameter selection are derived. A new adaptive strategy for choosing parameters is also proposed to assure convergence of IPSO method. The proposed IPSO algorithm is also extended to handle mixed variables, such as transformer taps and the reactive power source installation, using a simple scheme. The IPSO applied for optimal power system reactive power dispatch is evaluated on an IEEE 30-bus power system and a practical 118-bus power system in which the control of bus voltages, tap position of transformers and reactive power sources are involved to minimize the transmission loss of the power system. Simulation results demonstrate that the proposed approach is superior to current methods for finding the best solution, in terms of both solution quality and algorithm robustness.