This paper proposes active and reactive power management based on distributed optimization method that is employed to minimize loss, voltage variation of buses, load shedding and variation of power generation. In this approach, energy efficiency is improved and voltage profile is kept in an acceptable range under different operating conditions of renewable energy resources and loads. Three various power control methods such as (1) active power control (APC), (2) reactive power control (RPC) and (3) simultaneous APC with RPC are implemented by proposed active and reactive power management unit (ARMU). Measurement units collect essential information and send them to ARMU in each bus. ARMU determines the active and reactive power set points of dispatchable DGs and loads and reactive set points of non-dispatchable DGs in each bus. Also ARMU updates set point in less than one second and all controllable units contribute to voltage and power control which is proper for online optimization. Simulation results show the superior performance of this control method to regulate dynamic active and reactive power set points in distribution network.