This work proposes an alternative strategy to the use of a speed sensor in the implementation of active and reactive power based model reference adaptive system (PQ-MRAS) estimator in order to calculate the rotor and stator resistances of an induction motor (IM) and the use of these parameters for the detection of inter-turn short circuits (ITSC) faults in the stator of this motor. The rotor and stator resistance estimation part of the IM is performed by the PQ-MRAS method in which the rotor angular velocity is reconstructed from the interconnected high gain observer (IHGO). The ITSC fault detection part is done by the derivation of stator resistance estimated by the PQ-MRAS estimator. In addition to the speed sensorless detection of ITSC faults of the IM, an approach to determine the number of shorted turns based on the difference between the phase current of the healthy and faulty machine is proposed. Simulation results obtained from the MATLAB/Simulink platform have shown that the PQ-MRAS estimator using an interconnected highgain observer gives very similar results to those using the speed sensor. The estimation errors in the cases of speed variation and load torque are almost identical. Variations in stator and rotor resistances influence the performance of the observer and lead to poor estimation of the rotor resistance. The results of ITSC fault detection using IHGO are very similar to the results in the literature using the same diagnostic approach with a speed sensor.