A method for external subsystem model reduction is proposed. The reduction process starts with the load node elimination, resulting in a Ward-PV equivalent which contains all boundary and generator nodes. The number of the generator nodes is significantly decreased by aggregation. This is done by the Zhukov method, which replaces each selected group of the generator nodes by one equivalent generator node. The obtained equivalent is called the reduced Ward-PV equivalent. All generating units attached to the aggregated generator nodes are also aggregated into equivalent generating units. The equivalent obtained by such a method may be used for both steady-state and dynamic security analysis. The reduced Ward-PV equivalent retains the static and dynamic properties of the original Ward-PV equivalent if the aggregated generator nodes are grouped for aggregation on the base of coherency. The Yugoslav electrical power system was used as the sample system for testing the proposed method. >