With the increasing demand for higher performance, safety and reliability of dynamic systems, fault diagnosis has received more and more attention. The observer-based strategy is one of the active research fields, which is widely used to construct model-based fault detection systems for technical processes which can be well modelled as linear time invariant systems. Fault diagnosis for nonlinear system is an active area of research. Observer-based fault detection includes two stages, residual generation and residual evaluation. The residual generation problems and residual evaluation problems for systems with only deterministic disturbances or stochastic disturbances have been widely separately studied. Recently some efforts have been made in the integrated design of fault detection systems for systems with deterministic disturbances and stochastic disturbances. Recently, successful results of applying Takagi-Sugeno (TS) fuzzy model-based technique to solve fault detection and isolation problems met in the nonlinear system have been achieved. With TS model, a nonlinear dynamic system can be linearised around a number of operating points. Each linear model represents the local system behaviour around the operating point. The global system behaviour is described by a fuzzy IF-THEN rules which represent local linear input/output relations of the nonlinear system. Applying the Takagi-Sugeno fuzzy model based technique to solve fault detection and isolation problems in the nonlinear systems is active area of research. The main contribution of this thesis is the design of robust fault detection systems based on Takagi-Sugeno fuzzy filters. There are a number of schemes to achieve robustness problem in fault detection. One of them is to introduce a performance index. It is function of unknown input signal and fault signal. For continuous time system, first, robust fault detection system will be designed for nonlinear system with only deterministic disturbance as unknown inputs. Second, robust fault detection system will be designed for nonlinear system with deterministic disturbance as unknown inputs and parameter uncertainties. Finally, robust fault detection system will be designed for nonlinear system with deterministic disturbance as unknown inputs and stated delay. Sufficient conditions for solving robustness problem are given in terms of Linear Matrix Inequalities (LMIs). For discrete time system, kalman filter design for nonlinear system is diffcult. In this thesis new fault detection approach will be presented for nonlinear system with only stochastic disturbance. Fault Detection (FD) system for each local subsystem is design by solving the corresponding Discrete-time Algebraic Riccati Equation (DARE). Optimisation algorithm based on minimizing the residual covariance matrix is used to obtain a robust FD system optimised for global system behaviour. The optimisation algorithm is established in terms of LMIs. The different robust fault diagnosis system are developed to detect sensor faults of vehicle lateral dynamic control systems.