Integration of Distributed Generation (DG) in distribution power system would affect the fault current level and therefore the relay settings. This paper presents a protection scheme based on the Wavelet Transforms for the detection of the faults with and without DGs. Faults are simulated at each bus and the fault currents are analyzed with Haar wavelet to obtain detail coefficients of single level decomposition. Fault indices are calculated based on d-coefficients and compared with threshold for detecting the fault. The performance of the proposed protection scheme is tested by considering the variations in location and capacity of DG successfully. © 2012 IEEE.