In this paper, a novel fault detection and isolation (FDI) method for switching linear systems is developed. All input and output signals are assumed to be corrupted with measurement noises. In the proposed method, a 'lifted' linear model named as stochastic hybrid decoupling polynomial (SHDP) is introduced. The SHDP model governs the dynamics of the switching linear system with all different modes, and is independent of the switching sequence. The error-in-variable (EIV) representation of SHDP is derived, and is used for the fault residual generation and isolation following the well-adopted local approach. The proposed FDI method can detect and isolate the fault-induced abrupt changes in switching models' parameters without estimating the switching modes. Furthermore, in this paper, the analytical expressions of the gradient vector and Hessian matrix are obtained based on the EIV SHDP formulation, so that they can be used to implement the online fault detection scheme. The performance of the proposed method is then illustrated by simulation examples.