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Fault identification and location in optical networks is hampered by a multitude of factors: the redundancy and the lack of coordination (internetworking) of the managements at the different layers (WDM, SDH/SONET, ATM, IP); the large number of alarms a single failure can trigger; the difficulty in detecting some failures; and the resulting need to cope with missing or false alarms. Moreover, the problem of multiple fault location is NP-complete, so that the processing time may become an issue for large meshed optical networks. We propose an algorithm for locating multiple failures at the physical layer of a WDM network. They can be either hard failures, that is, unexpected events that suddenly interrupt the established channels; or soft failures, that is, events that progressively degrade the quality of transmission; or both, hard failures are detected at the WDM layer. Soft failures can sometimes be detected at the optical layer if proper testing equipment is deployed, but often require performance monitoring at a higher layer (SDH, ATM, or IP). Both types of failures, and both types of error monitoring, are incorporated in our algorithm, which is based on a classification and abstraction of the components of the optical layer and of the upper layer. Our algorithm does not rely on timestamps nor on failure probabilities, which are difficult to estimate and to use in practice. Moreover, our algorithm also handles missing and false alarms. The nonpolynomial computational complexity of the problem is pushed ahead into a precomputational phase, which is done off-line, when the optical channels are set up or cleared down. This results in fast on-line location of the failing components upon reception of the ringing alarms.