Abstract Voltage instability is the phenomena associated with heavily loaded power systems. It is normally aggravated due to large disturbance. Due to deregulation of power system, the system has to cater for the load bids in open access. This may cause the increased transaction level leading to more stress on the power system. It has become an urgent need of today to address the voltage stability problems to keep the voltage profile under control. Several incidences of voltage instability have occurred worldwide recently. In the event of contingency, the most serious threat to operation and control of power system is insecurity. The estimation of the power system state under contingency is an essential task for the power system engineers. The contingency analysis technique is a prerequisite to predict the effects of various contingencies like failure of transformers, transmission lines, etc. It helps to initiate necessary control actions to maintain power system security, reliability and stability. In the present work, two kinds of performance indices viz. active power performance index and reactive power performance index are computed for a large power system using a special code written in MATLAB environment. Furthermore, a novel idea of static voltage stability analysis by incrementing the load in proportion to the original load on load buses along with the most vulnerable line outage using Newton Raphson (N–R) load flow is presented.