The paper presents a novel systematic procedure for the design of excitation based stabilisers for large-scale interconnected electric power systems. The design method is based on newly obtained results in optimal linear quadratic regulator (LQR) design, and is superior to previously reported LQR approaches. A model of a fivemachine interconnected power system which includes detailed representation of synchronous machines, excitation systems, turbines and speed governing mechanisms is considered. Stabilisers of various structures are proposed. It is shown, through simulation studies, that the stabilisers improve the power system performance markedly, without excess demand for control action.