Network reconfiguration for loss minimization is the determination of switching-options that minimizes the power losses for a particular set of loads on a distribution system. In this paper, a novel method is proposed by formulating an algorithm to reconfigure distribution networks for loss minimization. An efficient technique is used to determine the switching combinations, select the status of the switches, and find the best combination of switches for minimum loss. In the first stage of the proposed algorithm, a limited number of switching combinations is generated and the best switching combination is determined. In the second stage, an extensive search is employed to find out any other switching combination that may give rise to minimum loss compared to the loss obtained in the first stage. The proposed method has been tested on a 33-bus system, and the test results indicate that it is able to determine the appropriate switching-options for optimal (or near optimal) configuration with less computation. The results have been compared with those of established methods reported earlier and a comparative study is presented. With the proposed method, for any input load conditions of the system, the optimum switching configuration can automatically be identified within a reasonable computer time and hence the method can be effectively employed for continuous reconfiguration for loss reduction. The method can be effectively used to plan and design power systems before actually implementing the distribution networks for locating the tieswitches and providing the minimum number of sectionalking switches in the branches to reduce installation and switching costs.