In view of power supply connection between the regional grids and smaller county grids, a novel distributed AVC system for district power networks is proposed. Firstly, a two-level AVC system is set up in the region and county power dispatch centers separately based on the integrated EMS both for regional wide and county wide grids. In this way, the two-level AVC system can run in the global mode or in the independent mode. Then the distributed AVC optimal control model is established, and the calculation factor is introduced in the objective function of the system, with which the calculation algorithm can be simplified. The optimal control model would be applied to the region and county AVC system at the same time. At last, the application in Wuhu grid shows that the system optimizes reactive power flow from the perspective of the whole region and improves the voltage qualification of the regional and county grids.