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The problem of fault detection and location in tree networks of two input EXCLUSIVE-OR (EOR) gates is considered. The fault model assumes that an EOR gate can change to any other function of its two inputs except the equivalence function. An efficient procedure for single fault location is presented. In the worst case the number of tests necessary to locate single faults is bounded by a linear function of the number of input variables. Constructive upper bounds are obtained for the number of tests to detect multiple faults. Optimality of these bounds is argued and extension of results to other types of networks is considered.