Wide-area damping controller design based on the identification of test signals can eliminate the limitation of the grid scale and the mathematic model order， the accuracy of the element model and its parameters， and the effect of the operation condition. Utilization of the multi-signal Prony identification technique is presented to obtain residue matrices. The Prony indices of the mode observability and the mode controllability can be determined thereafter. The Prony indices are employed to optimize the controller location and the selection of the control feedback signals. The controller parameters are then designed according to the pole configuration method. Simulations on the 16-machine system and RTDS tests on the 4-machine system are performed to demonstrate the advantage of designed wide area power system stabilizer（PSS）.