The paper treats the problem of dynamic stability of a synchronous generator connected to an infinite bus. The problem analysis and the design of the power system stabilizer is facilitated by means of a simplified linear model of synchronous generator. Different loading and power factors cause the change of linear model parameters, due to which the conventional stabilizer with fixed parameters does no longer assure the optimal behaviour in the entire operating range. An improvement is obtained by a combined use of a conventional voltage controller and adaptive stabilizer which facilitates the tuning of parameters in the starting phase and preserves the required transient behaviour during operation in the entire loading range. The advantage of the proposed model reference adaptive control is the assured stability of the complete adaptive system. The simulation results show the applicability of the presented approach. 10 refs, 9 figs, 2 tabs