Abstract: The problem of integrity against sensor failures for networked control systems based on state observer is studied. Assuming that the time-delay is more than one sampling period, the system is modeled as a discrete time system with parametrical uncertainties. Based on the model, the state observe is designed and according to possible sensor failures, an augmented mathematic model for the networked control systems based on state observer is developed. Then in terms of the given quadratic performance index function, the integrity condition of the system is given and the designs for guaranteed cost fault-tolerant controller and observer are presented, by using the cooperative design approach of the controller and observer and the approach of bilinear matrix inequalities. An example is given to show the effectiveness of our method.