This paper introduces a method for fault-masking and system reconfiguration in power transmission systems. The paper demonstrates how faults are handled by reconfiguring remaining controls through utilisation of wide-area measurement in real time. It is shown how reconfiguration can be obtained using a virtual actuator concept, which covers Lure-type systems. The paper shows the steps needed to calculate a virtual actuator, which relies on the solution of a linear matrix inequality. The solution is shown to work with existing controls by adding a compensation signal. Simulation results of a benchmark system show ability of the reconfiguration to maintain stability.