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The increasing number of data centers is consuming significant power with an upward surge. Hence, to preserve such huge energy and operating cost of data centers, the cloud service providers consolidate Virtual Machines (VM) to minimize the number of active physical machines. However, lack of reliable security measurements and policy enforcement during the consolidation process, have increased the security risks to the clients. In this paper, the compartment isolation technique is introduced to improve the system security during the consolidation process. The security-based selection and placement algorithms are also presented. The comparative analysis of this improved security approach shows that utilizing the proposed method will reduce the security risks without impacting the overall power consumption in data centers.