A fault detection system for detecting a fault in a lifter oil manifold assembly (LOMA) of a displacement on demand engine that is operable during transition from activated and deactivated modes includes a first fluid circuit of the LOMA that selectively provides pressurized fluid to regulate operation of the engine between activated and deactivated modes. The fault detection system further includes a sensor that is responsive to fluid pressure of the LOMA and that generates a pressure signal based thereon. A control module outputs a control signal to switch operation of the engine between the activated and deactivated modes. The control module further determines a pressure differential based on a first pressure prior to switching between the modes and a second pressure after switching between the modes.