Test P a t t e r n Generation (TPG) forsequential and/or %state circuits involves t w o important aspects which often are handled incorrectly: Bus conflict detection and completeness of search an TPG. T h e correct handling of both aspects strongly depends o n the signal model used by TPG. W e propose a novel, set-based, signal model using the power-set (i.e., the set of all possible subsets) of the basic values { 0 , 1 , Z } . TPG using this signal model guarantees complete search, provides exact bus-conflict detection, and is 'more e f i c i e n t t h a n TPG using the traditional signal models for 3-state and sequential circuits. Experimental results demonstrate this by higher fault eficiencies combined with a large reduction of backtracking and computing t i m e f o r seqvential ISCAS'89 and industrial circuits.