In this work we present a novel approach in order to improve the power system stability, by designing a coordinated structure composed of a power system stabilizer and static synchronous series compensator (SSSC)-based damping controller. In the design approach various time delays and signal transmission delays owing to sensors are included. This is a coordinated design problem which is treated as an optimization problem. A new hybrid particle swarm optimization and gravitational search algorithm (hPSO–GSA) algorithm is used in order to find the controller parameters. The performance of single-machine infinite-bus power system as well as the multi-machine power systems are evaluated by applying the proposed hPSO–GSA based controllers (PSS and damping controller). Various results are shown here with different loading condition and system configuration over a wide range which will prove the robustness and effectiveness of the above design approach. From the results it can be observed that, the proposed hPSO–GSA based controller provides superior damping to the power system oscillation on a wide range of disturbances. Again from the simulation based results it can be concluded that, for a multi-machine power system, the modal oscillation which is very dangerous can be easily damped out with the above proposed approach.