The current practice of factor of safety computation of pile-stabilised slopes depends substantially on either the extension of methods for normal slopes with the pile-contribution introduced as an additional term or finite-element modelling. Extending conventional methods to analyse pile-stabilised slopes fails to capture the key mechanisms like soil arching, gradual transfer of resistance offered by the pile through the slope, change in slip surface due to introduction of piles and so on. In this paper, a new algorithm is proposed to compute the factor of safety of pile-stabilised slopes, in which the Morgenstern–Price method is modified to incorporate the effect of a pile. The resistance offered by the pile is obtained using a pressure-based method which considers the soil-arching effect in horizontal and vertical directions. The gradual propagation of this resistance offered by the pile is incorporated through an iterative procedure, unlike the conventional methods. The algorithm considers the change in slip surface due to the introduction of the pile. The factor of safety values computed using the proposed algorithm were found to be in close agreement with that obtained from finite-element modelling. Moreover, a simple technique to determine the optimal location of stabilising piles and pile-spacing is also presented.