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In this paper we present a new approach to multiple fault diagnosis in combinational circuits based on an effect-cause analysis. The main vehicle of our approach is the deduction of internal line values in a circuit under test N*. The knowledge of these values allows us to identify fault situations in N* (causes) which are compatible with the applied test and the obtained response (the effect). A fault situation specifies faulty as well as fault-free lines. Other applications include identifying the existence of nonstuck faults in N* and determination of faults not detected by a given test, including redundant faults. The latter application allows for the generation of tests for multiple faults without performing fault enumeration.