A reconfiguration method for distribution network with distributed generation（DG） is presented，which uses DG island to guarantee the power supply for crucial customers once fault occurs in a distribution network， while minimizing the system loss at the same time. With Bender's decomposition method， the optimal procedure is decomposed into two phases， namely， the capacity optimization and network reconfiguration. The former is used to determine the optimal power supply of DG island while the latter to provide an optimal reconfiguration scheme with less power loss. The two phases are integrated to achieve the final optimal scheme by feeding the sensitivity of power loss versus switches in the reconfiguration phase to the capacity optimization phase with the Bender cut. Tests on the IEEE 33-bus system and PG&E 69-bus system validate the proposed method.