This paper presents a novel approach based on Prony method to analysis of small signal stability in power system. Prony method is a valuable tool in identifying transfer function and estimating the modal parameter of power system oscillation from measured or computed discrete time signal. This paper define the relative residue of time signal and propose the condition to select low frequency oscillation in each generator. This paper describes the application results of proposed algorithm with respect to KEPCO systems. Simulation results show that the proposed algorithm can be used as another tools of power systems analysis.