ABSTRACT In this work, the stability of a single area power system AVR loop is analysed in terms of specified gain and phase margin standpoint, by utilising an extended reduced-order observer (EROO). The design approach utilises a full-state feedback as well as an estimated signal for external disturbance (parametric uncertainties and disturbances due to change in load demands) to form the control law. Symmetric root locus (SRL) technique is used to assign the closed-loop poles (CLPs) of the system at desired locations by considering the stability margins. Parametric model uncertainty has been considered to demonstrate the robustness of control achieved by assigning a bound on the deviations in plant parameters. The proposed observer provides the estimates of unavailable states and state of the disturbance model in order to compensate system in the presence of external disturbances. The control scheme achieves performances satisfying the specified stability margins with asymptotic tracking and disturbance rejection property. The methodology provides control over peak values of the terminal voltage (with guaranteed zero steady-state errors) and control signal deviations which may be utilised to meet hardware constraints. Step by step design procedures with illustrative examples have been provided using MATLAB commands.