The paper presents the design of a linear observer for estimation of concentrations of xenon, iodine, and delayed neutron precursors in different regions of a large pressurized heavy water reactor, from measurement of zonal power levels. The nuclear reactor is described by a 56th order nonlinear model. The model is linearized around the rated reactor power. The control law requires the feedback of 56 states while only 14 are measured, thereby necessitating a 42nd order observer. By redefining the state and control variables, the problem of designing the observer of order 42 is decomposed into design problems of fourteen observers of order 3 each, which is comparatively much simpler task. The performance of the observer has been investigated by simulation.