Failure statistics of most utilities indicate that distribution systems make the greatest individual contribution to the unavailability of supply to customers. Optimal capacitor placement in distribution systems has a number of advantages such as reducing losses, improving voltage profile, improving power factor and so on. The conventional objective function of the optimal capacitor placement consists of the total cost of losses and investments. Since capacitors supply reactive loads locally, they improve the load-carrying capability of the lines and therefore play the same role as redundant lines. Thus, optimal capacitor placement can also improve the reliability indices of a distribution system. Therefore two new objective functions are defined here. The first one is defined as the sum of reliability cost and investment cost. The second is defined by adding the reliability cost, cost of losses and investment cost. The latter is a comprehensive objective function which is the resultant of the conventional and reliability-based objective functions. This problem is solved using a particle swarm optimisation-based algorithm. The effectiveness and applicability of the proposed approach are examined using a distribution network.