The recloser-fuse coordination of the distribution networks equipped with distributed generators (DGs) may be jeopardized by using the conventional overcurrent protection strategies thus degrading the network reliability. This research article focuses on the design of a protection coordination strategy based on the dual-setting directional recloser (DSDR) for the effective implementation of a fuse-saving scheme in distribution networks (DNs). The proposed DSDR-based protection strategy will assist the network operators by providing a flexible coordination range along with more accurate protection settings to meet the protection coordination requirements. The performance of the proposed protection scheme has been validated through its implementation on IEEE standardized test systems and a comparative analysis has been drawn to demonstrate its effectiveness. Furthermore, this research work concentrates on the economical design of the protection strategy for distribution networks by utilizing fewer numbers of protective devices (PDs). The results show that the proposed strategy will considerably reduce the number of temporary and sustained interruptions experienced by the consumers of large distribution networks thus improving the network reliability indices.