-Phasor Measurement Unit (PMU) placement is a crucial problem for State Estimation (SE) of the power system, which can ensure that the power network is fully observed. Further, the observation reliability problem of the system has been concerned in the operation conditions. In this paper, based on modified weighted adjacent matrix (A w ), an optimal placement method is proposed to solve simultaneously two problems involving the optimal PMU placement problem and the observation reliability enhancement problem of the system. The purpose of the proposed method is to achieve both the minimum total cost and the maximum observation reliability, with a focus on increasing the security of observability, strengthening the observation reliability of buses as well as enhancing the effectiveness of redundancy. Simulations on IEEE 14, 24, 30 and 57 bus test systems are presented to justify the methodology. The results of this study show that the proposed method is not only ensuring the power network having the observability effectively but also enhancing significantly the observation reliability. Therefore, it can be a useful tool for SE of the power system.