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This paper presents a novel approach to dynamic stability enhancement using PID damped fuzzy susceptance controlled static VAR compensator (SVC). Static VAR compensator is proven the fact that it improves the dynamic stability of power systems apart from reactive power compensation; it has multiple roles in the operation of power systems. The additional auxiliary control signals to SVC play a very important role in mitigating the rotor electromechanical low frequency oscillations. A proportional-integral-derivative (PID) type controller is designed using the generator speed deviation, as a modulated signal to SVC, to generate the desired damping, is proposed in this paper. The fuzzy logic controller is considered to generate the required incremental firing angle delays for SVC. The simulations are carried out for multi-machine power system at different operating conditions.