With the access of small hydro-power stations (SHS), the distribution system presents a multiple power supply pattern, which has a negative impact on the original local feeder automation (LFA) which is suitable for single side power supply system. In view of this effect, the phase to phase short-circuit fault (PPF) and single-phase grounding fault (SPGF) are treated differently, and an improved LFA method (IMLFA) considering SHS’s access based on low-frequency load shedding (LFLS) and high-frequency generator tripping (HFGT) is proposed. In case of SPGF, the section switch (SSW) and the outgoing circuit breaker of the substation shall be opened in sequence, and the isolated network (IN) generated in the process can be operated stably by cooperating with LFLS or HFGT while the fault is preliminary isolated. The SSW and the breaker are added with the function of no-voltage detection and synchronization detection. In case of instantaneous fault, the power supply in the fault area can be restored after a series of operations, and the IN can be connected to the grid. If it is a permanent fault, the section switches (SSWs) around the fault area will be locked to close in order to isolate the fault effectively, and the IN, not separated by the fault area from the grid, can be connected to the grid. Analysis and simulation show that the method is correct and feasible.