A controller reduction procedure based on a representation of a controller as a matrix function defined using stable proper transfer functions and employing a balancing technique is studied in this paper. For a certain right coprime factorization of an LQG designed controller K(s) = N(s)D-'(s), we approximate using a balancing technique the pair [D(s), N(S)]T by a low-order pair [D,(s), N,(S)]T defining a factorization of the reduced-order controller K ,(s) = N ,(s)D~'(s). Weshow that reducing the controller order in this way is motivated in a natural way, which leads to the expectation of both good stability properties and good accuracy of approximation of closed-loop behaviour. This is also demonstrated in some examples.