Consider systems that have an intrinsic mathematical representation of the form: 

 , where 

 is the 

 th derivative of 

 , and 

 . The matrices 

 may possess certain properties. The problem is to construct a reduced model having the same form with corresponding matrices 

 of smaller dimension and possessing the same properties. An algorithm for this structure-preserving model reduction is presented. An algorithm for constructing an approximate reduced model, called 

 -structure preserving reduced model is also presented, together with the error bounds. The application of the method to power system dynamic equivalents is described.