A method and system for identifying a distributed model for a nonlinear system represented by a block diagram. The distributed model identification can be achieved by first replacing all signal links across the block diagram with elastic links by augmenting each input port of a plurality of blocks with a signal generator that produces a replacement signal value (sig) for the value received by each of the plurality of blocks. Thereafter, the difference between the received value and the replacement signal values can be calculated and outputted as an auxiliary signal to control elasticity of the elastic links. Then, instead of global identification of the block diagram parameters, i.e. treating the diagram as a whole, the block parameters are identified locally based on the local data. Simultaneously, the auxiliary output signals are forced to vanish. Consequently, the solution found is also a solution to the global identification method.