In the future, the limit of power transmission handling capability of power systems will be violated due to the pursuit of economic benefit and increase penetration of renewable energy resources. Hence, the likelihood of voltage instability and system's risk of experiencing voltage collapse has increased. The voltage stability analysis remains a major concern in the operation of modern power systems. So far, the voltage stability analysis has been carried out using various methods. In this study, we propose a method to improve the voltage stability of power system by applying demand response, DR to control the active power of each load bus based on the voltage stability index. The approach showed credible Voltage stability improvement of all the transmission lines in the power system, thereby maximizing the capacity of the available transmission lines. We have also been able to achieve cooperative control of the power system between the customer and the distribution company by applying the DR at each load bus, with each load bus representing individual customer.