In this paper the applicability of spatial continuous wavelet transform (CWT) technique for damage identification in the beam structure is analyzed by application of different types of wavelet functions and scaling factors. The proposed method uses exclusively mode shape data from the damaged structure. To examine limitations of the method and to ascertain its sensitivity to noisy experimental data, several sets of simulated data are analyzed. Simulated test cases include numerical mode shapes corrupted by different levels of random noise as well as mode shapes with different number of measurement points used for wavelet transform. A broad comparison of ability of different wavelet functions to detect and locate damage in beam structure is given. Effectiveness and robustness of the proposed algorithms are demonstrated experimentally on two aluminum beams containing single mill-cut damage. The modal frequencies and the corresponding mode shapes are obtained via finite element models for numerical simulations and by using a scanning laser vibrometer with PZT actuator as vibration excitation source for the experimental study.