This paper proposes a real-time centralized controller for addressing small-signal instability related events in large electric power systems. The proposed system is meant to be a safety net type control strategy that will detect and mitigate small-signal stability phenomena as they emerge in the system. Specifically, it will use wide-area monitoring schemes to identify the emergence of growing or undamped oscillations related to interarea and/or local modes. Rules are developed for increasing Multi-Prony method's observability and depecdability. When the central control unit detects an oscillatory mode with low or negative damping ratio, say less than one percent, the controller devices, initially working in voltage regulation mode, into a full interarea active power damping operation for correcting the damping level of the problematic mode. This paper presents a set of rules and results for the application of a Multi-Prony algorithm in real-time for detecting the onset of the oscillations. This centralized wide-area controller is shown to be effective on a validated western American large-scale power system model of the August 10, 1996 blackout event.