The authors present an algorithm for order reduction of linear dynamic SISO discrete systems using the combined advantages of the improved generalized Least squares method and error minimization by Differential Evolution technique (DE). The denominator of the reduced order model is obtained by improved generalize least squares method and the numerator coefficients are determined by minimizing the integral square error between the transient responses of original and reduced order models using DE technique, pertaining to unit step input. The reduction procedure is simple, efficient and computer oriented.