This paper presents a method for fault detection and diagnosis of actuator loss of effectiveness for a quadrotor helicopter. This paper not only considers the detection of the actuator loss of effectiveness faults, but also addresses the diagnosis of the faults. The detection and estimation of the faults are performed by the Augmented Extended Kalman Filter. The faults are modelled as random walk processes and are treated as additional states which makes the fault estimation unbiased. The estimated faults can be further used for Fault Tolerant Control. Simulation both without and with the occurrence of the actuator faults demonstrates the effectiveness of the proposed approach.