This study proposes a novel dynamic reliability network-equivalent approach (RNEA) for distribution generations (DGs) enhanced distribution system. This method includes a bottom-up process and a top-down process, which are developed based on equivalent principle, and the synthesis of both processes yields the reliability performance of any node in the system. In addition, a novel switch zone concept is defined and introduced into the bottom-up equivalent process as to save the computation cost. Besides, a hybrid restoration model is proposed to account for the practical restoration process in power grids, and solved using particle swarm optimisation. The most significant of the proposed approach over other equivalent methods such as section technique, RNEA, and zone-branch method is that it provides a more generalised element-by-element equivalent approach that can greatly simplify the network for reliability assessment irrespective of the network topology. The proposed methodology has been successfully tested on a real 362-node urban distribution system in China, with and without DGs considered.