Present study focuses on the diffuse damage, its possible direction of growth and eventually its effect in the growth of matrix cracking. A detailed homogenization based micro- mechanics is used to study the local stress fields at the crack front of diffuse damage in unit cell RVE (representative volume element). Based on the state of this stress field, macro stresses which are responsible for the growth of diffuse damage along the circumference and away from circumference of fiber will be predicted. Study will focus on the coupling effect of three damages i.e fiber breakage, diffuse damage, matrix cracking. Based on these studies a continuum mechanics based (meso) damage model, developed by previous studies, has been improved by incorporating the coupling effect of these damages. © 2012 AIAA.