The state assignment for a finite state machine greatly affects the delay, area, power dissipation, and testabilities of the sequential circuits. In order to improve the testabilities and power consumption, a new state assignment technique . based on m-block partition is introduced in this paper. By the m-block partition algorithm, the dependencies among groups of state variables are minimized and switching activity is further reduced by assigning the codes of the states in the same group considering the state transition probability among the states. In the sequel the length and number of feedback cycles are reduced with minimal switching activity on state variables. It is inherently contradictory problem to optimize the testability and power consumption simultaneously, however our new state assignment technique is able to achieve high fault coverage with less number of scan nfp flops by reducing the number of feedback cycles while the power consumption is kept low upon the low switching activities among state variables. Experiment shows drastic improvement in testabilities and power dissipation for benchmark circuits.