A spectral element model-based structural damage identification method (SDIM) was derived in the previous study by using the damage-induced changes in frequency response functions. However the previous SDIM often provides poor damage identification results because the nonlinear effect of damage magnitude was not taken into account. Thus, this paper improves the previous SDIM by taking into account the nonlinear effect of damage magnitude. Accordingly an iterative solution method is used in this study to solve the nonlinear matrix equation for local damages distribution. The present SDIM is evaluated through the numerically simulated damage identification tests.