In this paper, a novel two-stage numerical algorithm devoted to fault distance calculation and arcing faults recognition is presented. The first algorithm stage serves for the fault distance calculation. The fault distance is calculated from the fundamental frequency phase voltages and current phasors, thus utilizing the positive- and the zero-sequence impedances of the line as input parameters. The second algorithm stage serves for the arc voltage amplitude calculation. It utilizes the fault distance calculated in the first algorithm stage as well as the third harmonics of the terminal phase voltage and line current phasors, respectively. From the calculated value of arc voltage amplitude it can be determined whether the fault is transient arcing fault or permanent arcless fault. The phasors needed for algorithm execution are calculated by using the Discrete Fourier Technique. In this paper, the solution for the most frequent phase-to-ground faults is given. The results of algorithm testing through computer simulation and real field data records processing are given.