Inter-area power oscillations damping is of fundamental importance in today's era of sophisticated and highly complex smart grids. The present paper demonstrates a practical solution obtaining satisfactory performance in damping power system oscillations utilizing the flexible VSC-HVDC transmission technology in an optimal combination with a power oscillation damping (POD) controller, utilizing active power modulation technique. Primary focus of the control scheme is to improve damping of lightly damped or even unstable modes of the interconnected AC/DC power system through modal analysis technique and a residue based approach. The proposed control scheme guarantees stability margins through eigenvalue analysis and non-linear time domain simulations, which are performed on a four-machine two-area system. The software platform under which the various simulation scenarios were implemented was DigSILENT PowerFactory.