AbstractVoltage stability of the power system is of major concern with ever‐increasing stress in the transmission network. The availability of ample reactive power reserve is essential to ensure voltage stability of the power system. Voltage stability and status of reactive power reserves can be monitored in real‐time by using synchrophasor measurements at a very fast reporting rate. Although much attention has been given to online voltage stability monitoring, there has been less focus on real‐time monitoring of reactive power reserve status. In this regard, the major contributions of the study are: (i) development of a novel distance‐based generalised approach for the computation of the system reactive power index, (ii) a proactive methodology for identification and impact estimation of the nearest Q‐limit breach and (iii) formulation of an optimisation problem to identify the limited number of critical generators that need PMUs for accurately predicting the value of the proposed index. The proposed scheme looks at the reactive power reserve of the generators in the network as numerical features. The istance between the base case and nose point numerical features is computed offline. The distance between the current operating point and nose point numerical features can be computed in an online manner. The ratio of these two distance measures is proposed as a system reactive power index. Moreover, a methodology to predict the post‐Q limit breach value of the index is also introduced. The proposed approach can be used with PMUs, linear state estimators or traditional SCADA measurements. Case studies for IEEE 57 and 118 bus test systems are presented to validate the performance of the proposed index.