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This paper proposes a fault diagnosis method using a timed discrete-event approach based on interval observers that improves the integration of fault detection and isolation tasks. The interface between fault detection and fault isolation considers the activation degree and the occurrence time instant of the diagnostic signals using a combination of several theoretical fault signature matrices that store the knowledge of the relationship between diagnostic signals and faults. The fault isolation module is implemented using a timed discrete-event approach that recognizes the occurrence of a fault by identifying a unique sequence of observable events (fault signals). The states and transitions that characterize such a system can directly be inferred from the relation between fault signals and faults. The proposed fault diagnosis approach has been motivated by the problem of detecting and isolating faults of the Barcelona's urban sewer system limnimeters (level meter sensors). The results obtained in this case study illustrate the benefits of using the proposed approach in comparison with the standard fault detection and isolation approach.