Abstract The back-up third zone unit of distance relay may issue nuisance tripping command during different system critical events like power swing, voltage stress/instability and load encroachment. Since, such events are system symmetry phenomenon, the protection unit will not always able to discern them from three phase (symmetrical) fault in the distance relay third-zone region. The conventional relay algorithm fails to make a proper decision and results in unwanted tripping. This may further lead to system blackout. To mitigate this problem, a new approach based on the average rate of change of current (ARCC) is proposed. The method will work in integration with the conventional distance relay impedance setting algorithm to provide better results. The main advantage of the method is that it considers only local end current information. Within one power cycle, an accurate decision can be taken by the protective relay. The proposed method is validated considering IEEE 39-bus New England test system and the Indian regional power grid model modeled using EMTDC/PSCAD software. The simulation results for various critical cases and comparative analysis with existing methods shows effectiveness of the proposed method.