This paper presents the development of PSS from identifying the need for additional damping of a synchronous maschine through the excitation system by creating additional electromagnetic torque, which is in phase with the generator speed, until use of multi-band and multi-input PSS. Procedure of selecting location of PSS was made acording to participation analyasis of the dominant mode. Research on the impact of PSS on the dynamic stability of power system was made for various structures of used stabilizers. Analysis of the impact was performed in time and frequency domain. On the end of a paper a comparison of two different stabilizer structures performance was made and a way for further improvement of the dynamic stability of the power system ,based on participation analysis, was proposed.