High distribution system power-losses are predominantly due to lack of investments in R&D for improving the efficiency of the system and improper planning during installation. Outcomes of this are un-designed extensions of the distributing power lines, the burden on the system components like transformers and overhead (OH) lines/conductors and deficient reactive power supply leading to drop in a system voltage. Distributed generation affects the line power flow and voltage levels on the system equipment. These impacts of distributed generation (DG) may be to improve system efficiency or reduce it depending on the operating environment/conditions of the distribution system and allocation of capacitors. For this purpose, allocating of distributed generation optimally for a given radial distribution system can be useful for the system outlining and improve efficiency. In this paper, a new method is used for optimally allocating the DG units in the radial distribution system to curtail distribution system losses and improve voltage profile. Also, the variation in active power load in the system is considered for effective utilization of DG units. To evidence the effectiveness of the proposed algorithm, computer simulations are carried out in MATLAB software on the IEEE-33 bus system and Vastare practical 116 bus system.