This paper proposes an observer-based residual generator (OBRG) for diagnosing faults in a continuous non-affine system with polynomial non-linearities up to any finite degree where the fault and an unknown input affect both the system and part of the output. Firstly, given certain assumptions and the use of defined extended vectors, a parameterized polynomial system is considerred for which a compact set of sufficient conditions is given for the existence of a candidate OBRG. Conditions for error stability (by a Lyapunov method) and detectability are given. The calculation steps in the design of the OBRG are shown to involve the solution of three linear equations (with parameterizations) and the calculation of a set of constant matrices (for detectability of faults). A result is then given establishing that the design holds for a much wider class of systems. The residual design is applied to a real three-tank system.