In this paper, the operation of a system and distance relay is improved during voltage instability by using an improved strategy. After detecting the voltage instability, the third zone is blocked. However, the system is prone to voltage collapse. Shunt capacitor compensation and a load shedding scheme can be used to protect the system from voltage collapse conditions. Load shedding plans can be performed based on a reduction in the power flow in the line where the relay is located. The reason is that the minimum eigenvalue of the load flow Jacobian (reduced and unreduced Jacobians) is increased and the static voltage stability is improved. After the shunt capacitor compensation and load shedding, the relay margin becomes positive, impedance comes out from the third zone, and the relay does not need to remain blocked. The maximum loadability point (MLP) is increased by performing a control action in the system. To accomplish this strategy, the 14-bus IEEE test system is used.