In this study, displacement and strain energy mode shapes obtained from the structure, are processed using continuous spatial wavelet transforms for damage identification. A cantilever and simply supported beam are analysed in ANSYS to obtain mode shapes by performing modal analysis both for damaged and undamaged conditions. Different wavelets are processed to choose the best mother wavelet for detecting crack, a representation of damage. The dimensions of crack like depth are varied from 0.5 mm. Spatial distribution of wavelet coefficients obtained is used for identifying the damage. The quantification of the damage is done by using Lipchitz constant. It is observed that by using strain energy mode shapes the percentage of damage (crack) identification level can be improved than by using displacement mode shapes. The minimum damage level that the strain mode shape can identify is approximately 3% of the element thickness, whereas with displacement mode shapes, it is about 7% of the element thickness. Different types of crack configurations like single surface crack, double surface cracks and internal cracks are simulated and studied using both the modal methods. It is observed that the strain energy mode method could identify internal cracks also. © (2014) Trans Tech Publications, Switzerland.