Dynamic Voltage Restorer (DVR) restores the distribution system load voltage to a nominal balanced sinusoidal voltage, when the source voltage has distortions, sag/swell and unbalances. DVR has to inject required amount of Volt-Amperes (VA) into the system in order to maintain a nominal balanced sinusoidal voltage at the load. A new control technique is applied to compensate the sag with phase jumps in the source voltages. Keeping the cost effectiveness of DVR, it is desirable to have a minimum VA rating of the DVR, for a given system without compromising compensation capability. Hence, a methodology has been proposed in this work to minimize VA rating of DVR. The optimal angle at which DVR voltage has to be injected in series to the line impedance so as to have minimum VA rating of DVR as well as the removal of phase jumps in the three-phases is computed by Particle Swarm Optimization (PSO) technique. The present method was able to compensate voltage sags with phase jumps by keeping the DVR voltage and power ratings minimum, effectively. The proposed method has been validated through detailed simulation studies. ©2009 IEEE.