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This paper presents the basic concepts of a new fault diagnosis technique which has the following features: 1) is applicable to both single and multiple faults, 2) does not require fault enumeration, 3) can identify faults which prevent initialization, 4) can indicate the presence of nonstuck faults in the D.U.T., 5) can identify fault-free lines in the D.U.T. Our technique, referred to as effect-cause analysis, does not require a fault dictionary and it is not based on comparing the obtained response of the D.U.T. with the expected response, which is not assumed to be known. Effect-cause analysis directly processes the actual response of the D.U.T. to the applied test (the effect) to determine the possible fault situations (the causes) which can generate that response.