Fast and accurate estimation of voltage stability margin is essential for secure operation of the power systems. In this paper, a network reduction based method has been proposed to determine the closest distance to the point of voltage instability. Transformation of measurements is used to get the measurements for the reduced network corresponding to the original network. Shortest distance to voltage instability is computed iteratively using continuation power flow. The proposed approach has been applied on standard IEEE 14-bus and IEEE 118-bus test systems.