A novel method is proposed for finite element model updating and structural damage identification. The second generation wavelet is used as a platform for the multi-resolution representation of the updating information. This method reduces the uncertainty of the model updating process. At the lower level of resolution, the updating curve of stiffness is represented by a limited number of scaling and wavelet coefficients, which are realized with the generic algorithm (GA). The complex finite element model is simplified by matching a number of modal parameters for easy manipulation in the updating process. Then, damage identification is carried out based on the simplified model. An example of a box girder with variable cross-sections is given for varying sectional properties to show the effectiveness of the proposed method. The results indicate that the proposed method is stable against variations in crack depth and changes in the number of concentrated cracks. The method is also suitable for the identification of multiple groups of cracks.