There is an increasing demand for highly reliable systems in the safety conscious climate of today's world. When a fault does occur there are two desirable outcomes. Firstly, detection is required to discover whether functionality at a pre-determined level can be maintained and secondly, a necessary repair strategy is sought to minimise system disruption. Traditional focus on fault diagnosis has been through a sequential testing procedure or via real time mechanisms. The limitations have incorporated the issue of combining real time diagnosis; enabling fast analysis, with multiple fault causes. These issues are typical of critical situations within current complex system architectures. The diagnostic method suggested in this paper uses the digraph procedure, which represents the propagation of inputs through a system. The procedure involves generating a model; linking nodes referring to system parameters and determining the relationship(s) which connect the nodes. Fault detection occurs by means of tracing through the diagram. The method has been applied to a water tank system during steady state operation. Diagnosis is conducted by comparing readings from sensors in the system with expected readings, given the system mode of operation. The results demonstrate the effective use of this technique for fault diagnosis of the application system.