A method for controlling a power system having at least one inverter-based resource connected to an electrical grid includes monitoring, via at least one controller of the at least one inverter-based resource, one or more command signals issued by a system-level controller. The method also includes determining, via the at least one controller of the at least one inverter-based resource, whether the one or more command signals issued by the system-level controller includes oscillatory behavior characteristic of an instability. In response to determining that the one or more command signals issued by the system-level controller includes oscillatory behavior characteristic of the instability, the method includes reducing one or more gains of a volt-var regulator of the system-level controller to reduce the instability.