This paper proposed a discrete wavelet transform based method for time-varying physical parameter identification of shear type structures. The time-varying physical parameters are dispersed and expanded at multi-scale as profile and detail signal using discrete wavelet basis. To reduce the number of unknown quantity, the wavelet coefficients that reflect the detail signal are ignored by setting as zero value. Consequently, the time-varying parameter can be approximately estimated only using the scale coefficients that reflect the profile signal, and the identification task is transformed to an equivalent time-invariant scale coefficient estimation. The time-invariant scale coefficients can be simply estimated using regular least-squares methods, and then the original time-varying physical parameters can be reconstructed by using the identified time-invariant scale coefficients. To reduce the influence of the ill-posed problem of equation resolving caused by noise, the Tikhonov regularization method instead of regular least-squares method is used in the paper to estimate the scale coefficients. A two-story shear type frame structure with time-varying stiffness and damping are simulated to validate the effectiveness and accuracy of the proposed method. It is demonstrated that the identified time-varying stiffness is with a good accuracy, while the identified damping is sensitive to noise.