Monitoring of tyre a pressure in passenger vehicle is a major aspect of improved active vehicle safety. In this contribution, a new velocity compensated method for monitoring tyre pressure using vertical body acceleration signals is presented. It is found that the wheel hop frequency is strongly correlated with damping coefficient and nature of road excitation. Limitations of using the shift of wheel hop frequency are presented. To avoid the influence of nature of road excitation, a virtual transfer function has been derived between front and rear body acceleration signals based on certain predefined event of the vehicle. The delay in transfer function is strongly related to velocity of the vehicle. The characteristic features are generated from the frequency response of the virtual transfer function. The sensitivity analysis presents the effects of the variation of mass of the vehicle and the spring stiffness has no effect on the frequency response but the damping coefficient has an influence. A simple threshold is found from experiment data for classification of relative tyre deflation. The tyre pressure diagnostic algorithm is implemented online and tested for different relative tyre pressure deflations. © 2003 International Federation of Automatic Control.