In present times, the use of DG systems in large amounts in different power distribution systems has become very popular and is growing on with fast speed. Although it is considered that DG reduces losses and improves system voltage profile, this paper shows that this is usually true. The paper presents voltage stability index based approach which utilizes combine sensitivity factor analogy to optimally locate and size a multi-type DG in 48-bus Belin distribution test system with the aim of reducing power losses and improving the voltage profile. The multi-type DG can operate as; type 1 DG (DG generating real power only), and type 2 DG (DG generating both real and reactive power). It further shows that the system losses are reduced and the voltage profile improved with the location of type 2 DG than with the location of type 1 DG. It reaches a point where any further increase in number of DGs in the network results for minimizing power losses and voltage profiles improvement.