A system and method for correlating alarms from a plurality of network elements (NEs) are provided to unambiguously associate separate alarms to one another. This is accomplished by a method where a fault identifier FID is generated by a serving NE who discovered the faulty hardware or software unit. The serving NE signals its lost or degraded service to a client NE in a traffic message and appends the generated FID to the traffic message. The client NE extracts the FID from the traffic message and appends it to a service alarm which the NE sends to a network management system. The serving NE also generates an alarm message and provides it with same FID. The serving NE sends the alarm message and its FID to the network management system. The service alarm and the alarm message received by the network management system will thus contain the same FID. In the management system the FID is used to correlate the two alarms with one another.