A scheme for on line fault detection in a power system is introduced in this paper. The scheme is based on the use of a sliding mode observer where an appropriate set of output measurements is utilized to detect the onset of faults in the transmission network of the power system in real time and on-line. The power system considered in this study comprises a generating unit connected to an infinite bus through double line transmission network. The common case of a fault occurring on a transmission line is illustrated through simulation studies carried out on linear and nonlinear models of the power system.