A new method for the synthesis of finite state machines (FSMs) is proposed. In this method, such optimization criterion as the power consumption is taken into account already at the stage of minimizing internal states. In addition, the proposed method allows one to minimize the number of transitions and input variables of the FSM. The method is based on sequential merging of two internal states. For this purpose, the set of all pairs of states that can be merged is found, and the pair that best satisfies the optimization criteria is chosen for merging. The sequential algorithm is used for low power state encoding. Experimental results show, that the dissipated power is less by 7% comparing to traditional methods.