An arrangement and method for assessing and diagnosing the operating state of a device under test in the presence of a disturbing ambient noise and for detecting, localizing and classifying defects of the device which affect its operational reliability and quality. At least two sensors monitor signals at arbitrary locations which are affected by signals emitted by defects and by ambient noise sources. A source analyzer receives the monitored signals, identifies the number and location of the sources, separates defect and noise sources, and analyzes the deterministic and stochastic signal components emitted by each source. Defect and noise vectors at the outputs of the source analyzer are supplied to a defect classificator which detects invalid parts of the measurements corrupted by ambient noise, accumulates the valid parts, assesses the quality of the system under test and identifies the physical causes and location of the defects.