Structural modal estimation has consistently remained one of the most crucial areas of research in mechanical vibration analysis and signal processing. It is imperative to accurately monitor the vibration signals of rotor blades and their corresponding structural modal parameters. Blade tip timing (BTT) is a promising approach used to measure vibration and monitor the health of blades. However, most existing BTT methods focus on frequency accuracy, neglecting damping, a key physical quantity that represents the strength of the structure. This research focuses on damping modal estimation of blade vibration and proposes a sparse reconstruction algorithm based on a two-dimensional Laplace wavelet family, which addresses the inherent under-sampled problem of BTT technology while enabling estimations of both the structural modal frequency and modal damping of the blades. Firstly, the proposed algorithm is achieved by designing a Laplace wavelet dictionary based on prior information and using a convex optimization objective function with a regularization term. Secondly, Laplace wavelet dictionary matches the signal better than the traditional Fourier dictionary based on the similarity between the damped vibration signal and the Laplace wavelet, then a sparser representation vector can be obtained. Moreover, the research object is not limited to a single blade, but can be easily expanded to multiple stages and multiple rotating blades monitored simultaneously. Finally, the simulation and physical test results indicate that the proposed method exhibits high reconstruction accuracy, reliability, and anti-noise abilities.