a method for testing vlsi circuits comprises a two - pass diagnostic method for testing a circuit wherein a first pass comprises a conventional test flow wherein an atpg tool generates a set of test patterns and identifies possible faulty nets within the circuit . a second pass focuses on a designated critical subset of the circuit extracted using a method for extracting a subset for failure diagnosis of the tested circuit . a second pass utilizes an extraction algorithm which extracts one or more critical subsets of the circuit in order to obtain more accurate failure diagnosis .