The paper describes a modification of the method which uses the modal filtration for damage detection  to make it suitable for rotating machinery. Authors have formulated a diagnostic procedure which is based on the output only data measured during object operation. The measurement can be performed both by accelerometers placed on the shaft bearing cages and directly on the shaft with use of the laser vibrometer. The procedure was verified on the experimental data. For the experimental verification authors have used the laboratory stand which allows simulation of different faults.