DC Power Flow Model is a constant matrix, a non-iterative model which is built into DC Optimal Power Flow Model for market clearing and settlement of real power market. DC Optimal Power Flow Method is fast when compared to nonlinear Optimal Power Flow and the accuracy level is acceptable for security analysis. It is widely used for active power flow analysis in the deregulated power system. As of now, there are few papers available in DC Optimal Power Flow Model for reactive power flow analysis. This paper proposes a new Optimal Q Flow (OQF) method for market clearing and settlement of pure reactive power market. A lumped linear model is proposed for power balance equality constraint for fast convergence. In this method, a unique reference for delivery/withdrawal point for reactive power called Market Center is proposed to share the total transmission loss equitably between the GENCO and DISCO participants in a transparent manner for pure Q Market using incremental loss factor method. This model uses a slack bus independent loss factors measured with respect to “Market Center”. The objective function is to minimize the cost of the reactive power payable to GENCOs with respect to the market center. The compensation received by GENCO participants and Locational Marginal Price to be paid by DISCOs participants are derived for N bus. The OQF method is tested on a Radial Five Bus System, Ward and Hale 6 Bus System and IEEE 30 Bus System.The bus voltage magnitude computed using the Iterative Q Flow method is accurate and obtained for a mismatch tolerance of 0.1 MVAr. In the proposed method it is found that the total bus loss is reduced considerably thereby minimizing the cost of the objective function. Keywords: Iterative Q flow, Market center, Incremental loss factor, Loss allocation, Linear programming, Market clearing and settlement