Loss minimization in distribution networks has considered as great significance recently since the trend to the distribution generation will require the most efficient operating scenario for economic viability variations. Furthermore, voltage instability phenomena can occur in distribution systems and caused a major blackout in the network. The decline of voltage stability level will restrict the increase of load served by distribution companies. To control distribution networks, it can be used from Distributed Generation (DG). DG is increasingly drawing great attention and development of DGs will bring new chances to traditional distribution systems. However, Installation of DG in non-optimal places can result in an increasing in system losses, voltage problems, etc. This paper presents two scenarios for distributed generation placement in a distributions system. In the first scenario only minimizing the total real power losses in the system is considered. Both the optimal size and location are obtained as outputs from the exact loss formula. The next scenario considered the voltage stability index (SI) to find optimum placement. In these scenarios Different DG placements are compared in terms of power loss, loadability and voltage stability index. To improve power transfer capacity, two line stability indices have been introduced. Distribution power flow solution algorithm is based on the equivalent current injection that uses the bus-injection to branch-current (BIBC) and branch-current to bus-voltage (BCBV) matrices. These scenarios are executed on typical 33 and 30 bus test system and yields efficiency in improvement of voltage profile and reduction of power losses; it also may permit an increase in power transfer capacity, maximum loading, and voltage stability margin.