In this paper, a new agent-based distributed reactive power management scheme is proposed to improve the voltage stability of energy distribution systems with distributed generation units. Three types of agents - distribution system agent, estimator agent, and control agent are developed within the multi agent framework. The agents simultaneously coordinated their activities through the online information and energy flow. The overall achievement of the proposed scheme depends on the coordination between two tasks - (i) estimation of reactive power using voltage variation formula and (ii) necessary control actions to provide the estimated reactive power to the distribution networks through the distributed static synchronous compensators. A linear quadratic regulator with a proportional integrator is designed for the control agent in order to control the reactive component of the current and the DC voltage of the compensators. The performance of the proposed scheme is tested on a 10-bus power distribution network under various scenarios. The effectiveness is validated by comparing the proposed approach to the conventional proportional integral control approach. It is found that, the agent-based scheme provides excellent robust performance under various operating conditions of the power distribution network. (C) 2016 Elsevier Ltd. All rights reserved.