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In wireless sensor networks, localization in indoor environment suffers from non-LOS (line-of-sight) and multi-path fading. In this paper, a new localization algorithm is proposed, which makes essential use of distributed space-time-codes (DSTC) to combat fading. By cleverly devising DSTC and employing a novel ML synchronization technique, the proposed algorithm exploits the full benefits of TDOA (time-difference-of-arrival) techniques and provides a greater accuracy than the localization methods reported previously. Simulation results show that the new algorithm performs robustly in a variety of conditions.