For multi-objective optimal reactive power dispatch (MORPD), a new approach is proposed where simultaneous minimization of the active power transmission loss, the bus voltage deviation and the voltage stability index of a power system are achieved. Optimal settings of continuous and discrete control variables (e.g. generator voltages, tap positions of tap changing transformers and the number of shunt reactive compensation devices to be switched)are determined. MORPD is solved using particle swarm optimization (PSO). Also, Pareto Optimality PSO (POPSO) is proposed to improve the performance of the multi-objective optimization task defined with competing and non-commensurable objectives. The decision maker requires managing a representative Pareto-optimal set which is being provided by imposition of a hierarchical clustering algorithm. The proposed approach was tested using IEEE 30-bus and IEEE 118-bus test systems. When simulation results are compared with several commonly used algorithms, they indicate better performance and good potential for their efficient applications in solving MORPD problems.