The global energy demand in residential sector is increasing steadily every year due to advancement in technologies. The present electricity grid is designed to support peak demand rather than Peak to Average (PAR) demand. Utilities are investigating the residential Demand Response (DR) to lower the (PAR) ratio and eliminate the need of building new power infrastructure. This requires Home Energy Management System (HEMS) at grid edge to manage and control the energy demand. In this thesis, we presented an MDPSO based DR enabled HEMS model for optimal allocation of energy resources in a smart dwelling. The algorithm is designed to lower peak energy demand as well as encourage the active participation of customers by offering a reward to comply with DR request. We categorized appliances as elastic non-deferrable loads and inelastic deferrable loads based on their DR potential and operating characteristics. The scheduling of elastic and inelastic class of appliances is performed separately using canonical and binary version of PSO given how we expressed out load categories. We performed use case simulation to validate the performance of MDPSO for combination of different tariffs: Time of Use (TOU), TOU and Critical peak rebate signal (CPR), TOU and upper demand limit. Simulation results show that algorithm can reduce the electricity cost in range of 28% to 7% under increasing comfort conditions in response to TOU prices and Peak demand reduction of about 24% under TOU pricing and medium comfort conditions for single household. Under CPR DR requests, with respect to TOU pricing, there is effectively no change in the peak under the minimum comfort scenario. Furthermore, algorithm is able to suppress the peak upto 25% under combination of TOU and hard constraint on maximum power withdrawn from grid with no change in the electricity cost. Scheduling of multiple houses under TOU pricing results in peak reduction of 7 % as compared to baseline state. Under combination of TOU and CPR the aggregate peak energy demand of multiple households during DR activation time intervals is reduced by 32 %. The algorithm can suppress the peak demand by 27% under TOU and hard constraint on maximum power withdrawn from grid by multiple houses.