An AC generator is an important components in producing a electric power and so it requires highly reliable protection relays to minimize the possibility of demage occurring under fault conditions. Conventionally, a DFT based RDR has been used for protecting the generator stator winding. However, when DFTs based on Fourier analysis are used, it has been pointed out that defects can occur during the process of transforming a time domain signal into a frequency domain one which can lead to loss of time domain information. This paper proposes the internal fault detection and fault type discrimination for the stator winding by applying the detailed coefficients by Daubechies Wavelet Transform to overcome the defects in the DFT process. For the case studies reported in the paper, a model system was established for the simulations utilizing the ATP, and this verified the effectiveness of the proposed technique through various off-line tests carried out on the collected data. The propose method is shown to be able to rapidly identify internal fault and did not operate a miss-operation for all the external fault tested.