Under renewable generations mixed in today's modern grid system, many of renewable generation resources tend to increase the fault level to an existing power system. Rules and regulation for power equipment and devices need to be revised and updated, of course, no exception for the distribution transformers. This article, therefore, presents the evaluation and analysis of the winding temperature on both loading and short circuit conditions of an oil-immersed distribution transformer and propose the novel transformer design method for improving short circuit withstand capability. In the study, the methodologies of measuring and estimating the winding temperature of the transformer during short circuited are presented and implemented. In the study, various winding parameters are analysed including: the winding temperature, the hottest temperature of the winding after a short circuit, the short circuit current, short circuit force and short circuit duration. The tested and analysed result are benefit for the newly proposed distribution transformer design of a 400 kVA 3 phases 50 Hz 22 kV-400/230 V, Dyn11. The new design approaches will enable designers to find a weak spot and proper selection of raw materials, such as winding size, insulation thickness and properties of the silicon steel for a better quality of distribution transformer. Moreover, the new design can offer lower winding temperature rise of transformer while loading or experiencing with short circuit conditions meaning that it can prolong transformer insulation and extend transformer lifetime.