Abstract Voltage collapse phenomena are highly affected by the limits of Automatic Voltage Regulator (AVR) voltage that indirectly controls the amount of reactive power generation. Saturation of the limits of the AVR voltage of a unit may result in deterioration of voltage stability. In addition, in some cases when the power network is operating close to the voltage collapse point, the AVR voltage saturation of a unit can change the system voltages immediately from a stable to an unstable state. Thus, a dynamic voltage collapse leading to blackout is expected. This paper presents a steady state analysis of voltage instability associated to the AVR voltage saturation phenomena. For this purpose, a new methodology based on the predictor–corrector method is introduced to trace the total system equilibrium of the power system model. This methodology considers the AVR voltage limits of all generation units and computes both Saddle Node Bifurcation (SNB) and Saddle Limit Induced Bifurcation (SLIB) points. The New England 39-bus system is adopted to illustrate the effectiveness of the proposed method.