Abstract: This paper presents a novel continued fraction reduction method with two adjustable parameters,based on staibility analysis of continued fraction model reduction process.The values of adjustable parameters are determined by the relationship found between the amplitude and phase frequency response of the prototype and that of the approximations.The method,whose precision in approximation is better than any continued fraction methods currently available,can not only retain stability,but also reproduce relative stability of the prototype.Finally,discussions are also given to criteria upon which to estimate the error and determine the order of approximants in the process of reduction.In particular,this method can be satisfactorily applied to the design of engineering system.