A modal method is presented for the investigation of the effects of measurement errors in damage detection for dynamic structural systems. The structural modifications to the baseline system result in the response changes of the perturbed structure, which are measured to determine a unique system in the inverse problem of damage detection. If the numerical modal data are exact, mathematical programming techniques can be applied to obtain the accurate structural changes. In practice, however, the associated measurement errors are unavoidable, to some extent, and cause significant deviations from the correct perturbed system because of the intrinsic instability of eigenvalue problem. Hence, a self-equilibrating inverse system is allowed to drift in the close neighborhood of the measured data. A numerical example shows that iterative procedures can be used to search for the damaged structural elements. A small set of selected degrees of freedom is employed for practical applicability and computational efficiency.