Software development teams that use agile methodologies are increasingly adopting the test-driven development practice (TDD). TDD allows to produce software by iterative and incremental work cycle, and with a strict control over the process, favouring an early detection of bugs. However, when applied to large and complex systems, TDD benefits are not so obvious; manually locating and fixing bugs introduced during the iterative development steps is a nontrivial task. In such systems, the propagation chains following the bugs activation can be unacceptably long and intricate, and the size of the code to be analyzed is often too large. In this paper, a bug localization technique specifically tailored to TDD is presented. The technique is embedded in the TDD cycle, and it aims to improve developers' ability to locate bugs as soon as possible. It is implemented in a tool and experimentally evaluated on newly developed Java programs.