We propose a new and efficient algorithm to detect, identify, and correct measurement errors and branch parameter errors of power systems. A dynamic state estimation algorithm is used based on the Kalman filter theory. The proposed algorithm also successfully detects and identifies sudden load changes in power systems. The method uses three normalized vectors to process errors at each sampling time: normalized measurement residual, normalized Lagrange multiplier, and normalized inno-vation vector. An IEEE 14-bus test system was used to verify and demonstrate the effectiveness of the proposed method. Nu-merical results are presented and discussed to show the accuracy of the method.