Model-based approaches have been widely employed in damage detection and localization studies. However, alternative techniques, such as built-in online detection methods, hold promise for future advancements in structural health monitoring technologies. In this research paper, we present a dynamic algorithm specifically designed for accurate damage localization in functionally graded plates. The suggested method involves the creation of a grid matrix that captures the dynamic response of the structure over time. Subsequently, an optimization process is performed using a linear equation that incorporates the information contained within the grid, enabling the precise localization of damage. To address the inherent sparsity of the localization nature, we utilize the FISTA (fast iterative shrinkage-thresholding algorithm) as a problem solver. The effectiveness of our approach is evaluated through experimental tests on a functionally graded plate with clamped free boundary conditions. Multiple damage scenarios are investigated, including cases with damage signals on and off-the-grid. The results demonstrate that our proposed approach is capable of accurately predicting the position of damage, indicating its suitability for application in low-size data systems.