In the present day power system planning and operation, considerable interest is being shown in contingency analysis. Contingency screening and ranking is one of the important components of on-line system security assessment which is done with the help of various computer softwares which employ iterative methods like Newton Raphson and Fast Decouple Load Flow Methods for obtaining the magnitudes of various parameters. The objective of contingency screening and ranking is to quickly and accurately select a short list of critical contingencies from a large list of potential contingencies and rank them according to their severity. Suitable preventive control actions can be implemented considering contingencies that are likely to affect the power system performance. Network contingencies often contribute to overloading of network branches, unsatisfactory voltages and also leading to voltage collapse. To maintain security against voltage collapse, it is desirable to estimate the effect of contingencies on the voltage stability. This research paper presents a new approach using fuzzy logic to evaluate the degree of severity of the considered contingency and to eliminate masking effect in the technique.