A system and method for determining optimal selection of paths for passively monitoring a communications network. A diagnostic set of paths is determined by ensuring that, for all pairs of links in the network, the set contains one path having only one member of that pair. A detection subset of paths is determined by ensuring that, for all the links in the network, one member of the subset contains that link. Selecting a minimum detection and diagnostic set of paths minimizes the communication overhead imposed by monitoring. During normal operation, only the detection subset need be monitored. Once an anomaly is detected, the system may switch to monitoring the full diagnostic set. The cost of deploying and operating the passive monitoring equipment is minimized by determining the minimum set of links on which a probe needs to be placed in order to monitor the diagnostic set of paths.