This paper presents a robust fault diagnosis and fault tolerant control method for the control systems in closed-loop affected by unknown inputs or disturbances. The fault diagnostic scheme is based on the disturbance-decoupled state estimation using a 2-stage state observer for state, actuator bias and sensor bias. The estimated bias show the occurrence time, location and type of the faults directly. The estimated state is used for state feedback to achieve fault tolerant control against the faults. Simulation results show that the method has definite fault tolerant ability against actuator and sensor faults, moreover, the faults can be detected on-line, isolated and estimated simultaneously.