In this paper a method is presented to identify local non-linear stiffness and damping parameters from dynamic response data. The non-linearity is being taken into account by assembling non-linear two-degree-of-freedom elements into larger linear finite element models. Special care has been taken to keep the physical description of the structural model in the time domain. This model is linearized following the procedure of the harmonic balance method to get a suitable model description in the frequency domain. The response is calculated iteratively using dynamic condensation for the linear parts of the structure. Selected linear and non-linear parameters of an initial model are updated by minimising the deviations between analytical and measured displacement responses.