This paper presents a new governor control scheme based on an Output Feedback PID controller which guarantees the control stability associated with the feedback gain and improves damping of the generator. The proposed control scheme of speed governor is developed on the basis of the PID controller in the previous study. The differential feedback has been replaced by the nonlinear output feedback. The proposed output feedback control has two advantages: first, it guarantees the wide-range of stable region for any change in the frequency regulation droop R with differential and integral feedback gains chosen in some proper range, and second remarkably improves generator damping free from havoc by the differential feedback. This paper discusses the possibility that the proposed governor control can be utilized as one of the means for power system stabilization (PSS). The computer simulations have been conducted on three cases, which show that generator damping can be remarkably improved by the proposed frequency control scheme.