A fuzzy logic controller (FLC) is designed as a power system stabiliser due to its simplicity and robustness. The input and output membership functions were adjusted according to an evaluation index in order to achieve the optimal performance. The initial FLC design with a complete filled rule table (49 rules) can be reduced using neural network techniques to improve the dynamic performance. However, the simplified FLC does not work well when the power system is subject to a large disturbance such as a three-phase fault. The FLC with hierarchical structure consinsts of a multi-layer controller which incoprporates rule based FLCs for direct control at the lower level. The proposed FLC with hierarchical structure has improved the system performance under both small and large pertubations at various operating conditions.