This study presents a new method for allocation of network losses to distributed generations (DGs) and consumers connected to radial distribution networks in context of liberalised electricity market. The study intends to deal with three aspects, namely, issue of non-linear relation between power flow and losses, change in network losses because of voltage variation and contribution of DG to the network loss. The proposed method is a branch-oriented approach based on tracing the real and reactive power of DGs and loads. It establishes a direct relationship between sending and receiving node voltages and apparent power available at the receiving node of a branch. It allocates the losses without any assumptions and approximations by employing backward sweep network reduction technique. The proposed method is simple and effective; and requires only the power flow solution to allocate the losses to DGs and loads. Pro rata method, which is based on the power rating of generators and consumers, is revisited and modified according to branch oriented approach. To show the effectiveness of the proposed method, it has been tested on two test networks, that is, 28- and 33-node test networks. The obtained results are presented, discussed and compared with other published methods.