This paper approaches a technique that help to find and diagnosing faults in transmission lines using image process technique. Image processing technique is widely used in all area for solving the problems. In this paper, Digital image processing wavelet shrinkage function is use for fault identification and diagnosis. In the other word, take a faulty image from the source like thermo vision camera and real time recording instrument with the co-ordinates of transmission line. Uses the algorithm of digital image processing for segmentation of the image, segmentation divides the image in set of parts and objects, and then apply the wavelet shrinkage function to read the image and give the result. The proposed method provides results that are in terms of PSNR and visual quality.