In this paper a fault tolerant control design based on a sliding mode observer for induction motors is proposed. First, a direct field oriented controller based on backstepping technique is designed in order to steer the flux and speed variables to their desired references and to compensate the load disturbance. Second, a sliding mode observer is designed in order to detect and reconstruct the faults and also to estimate the flux. Then, additional control laws based on the estimates of the faults are designed in order to compensate the faults. Numerical simulations show the effectiveness of the proposed control scheme.