Short-term voltage instability (STVI) imposes a severe threat to modern distribution networks (DNs) where a large number of intermittent distributed generator (DG) units, like rooftop photovoltaic (PV), is being integrated. Consequently, most of the international standards have been revised by incorporating the requirement of the dynamic voltage support (DVS) through DG units, which is a promising approach to alleviate the STVI. In this paper, a novel DVS strategy is proposed to improve the short-term voltage stability (STVS) in residential grids. In comparison with other DVS strategies, the proposed DVS scheme maximizes the active power support from PV units following a contingency utilizing the maximum allowable current of the PV inverters. Moreover, the inverter design margin is taken into account in designing the proposed scheme to limit the injected grid current within the maximum allowable inverter current. The impact of the inverter design margin on the STVS is explained, and the effectiveness of the proposed strategy compared with the conventional DVS is demonstrated. The feasibility of the DVS control strategies in practical application is studied. Several case studies are carried out on benchmark IEEE 4 bus and IEEE 13 node test feeder systems, and finally, on a ring-type DN. The results show that the proposed DVS scheme is feasible, and achieved superior performance compared to the other strategies. Furthermore, it has been shown that implementation of the proposed DVS scheme can avoid the installation of an expensive 1200-kVA D-STATCOM for STVS improvement in the target system.