Rapid frequency dynamics may result in more critical frequency excursions as the power system's available rotational inertia is decreased by the growing proportion of converter-connected energy sources. To deal with this problem, the virtual synchronous generator (VSG) was recommended, which is a promising controller approach in future power systems owing to its inertial support and primary frequency regulation. However, VSGs ability to stabilize the frequency is limited because their damping and inertia coefficients are usually predetermined. Initially, damping's impact and changing inertia on the VSG's active power control loop is examined. This study suggests an optimization technique based on the fuzzy logic controller (FLC) that flexibility controls the VSG damping and inertia coefficients. Additionally, the developed multi-objective function is solved using the gray wolf optimization (GWO) algorithm to enhance the FLC. The virtual inertia and damping coefficients are continuously adjusted for the best frequency stability. To verify the efficacy of the proposed optimization and control method, a comprehensive nonlinear simulation analysis was carried out using MATLAB/Simulink with the conventional VSG.