The present work demonstrates an efficient method for reliability analysis using sequential development of the stochastic response surface. Here, orthogonal Hermite polynomials are used whose unknown coefficients are evaluated using moving least square technique. To do so, collocation points in the conventional stochastic response surface method (SRSM) are replaced by the sparse grid scheme so as to reduce the number of function evaluations. Moreover, the domain is populated sequentially by the sparse grid based on the outcome of the optimization to find out the most probable failure point. Hence, the support points are generated based on a coupled effect of the optimization for failure region and the sub-grids hierarchy. Continuous and differentiable penalty function is imposed to determine multiple failure points, if any, by repeating the optimization. Once the response surface is developed, reliability analysis is carried out using importance sampling. Five different benchmark examples are presented in this study to validate the performance of the proposed modeling. As the accuracy of the method is established, two reliability-based design examples involving nonlinear finite element (FE) analysis of plates are demonstrated. Numerical study shows the efficiency of the proposed sequential SRSM in terms of accuracy and number of time-exhaustive evaluation of the original performance function, as compared to other methods available in the literature. Based on these results, it may be concluded that the proposed method works satisfactorily for a large class of reliability-based design problems. © 2019 World Scientific Publishing Company.