A diagnosis method for distinguishing micro short circuit and small capacity faults of a battery, characterized by comprising the following steps: S1, predicting a mean state of charge SOC mean of a battery pack and a difference (dSOC) between the state of charge of each cell and the mean state of charge of the battery pack, and then obtaining SOC of each cell; S2, calculating transferred charge quantity and SOC variable quantity of each cell at every moment under charge and discharge conditions, and then utilizing a least square method to estimate the capacity of each battery cell under the charge and discharge conditions; and S3, comparing estimated results of each charge and discharge capacity of the battery cell, wherein the battery cells with similar capacity and similar charge and discharge capacity are normal cells; the cell with the estimated value under the discharge condition less than that of the normal cell and the estimated value under the charge condition greater than that of the normal cell is a micro-short-circuit cell; the cell with the estimated value less than that of the normal cell under both the charge and discharge conditions is the small-capacity cell, wherein in the step S3, the normal battery cell with similar capacity and similar charge and discharge capacity refers to that the result of the capacity of the cell estimated at a certain time is consistent with that of a majority of cells, that is, a median deviation from the cell capacity is within p 1%, and the difference between the charge capacity and the discharge capacity is within p 1%; and under both the charge and discharge conditions, if the estimated value is less than that of the normal cell by more than p 2%, and the difference between the charge capacity and the discharge capacity is within p 1%, then the cell is determined as the small-capacity cell; if the estimated value under the discharge condition is less than that of the normal cell, while the estimated value under the charge condition is greater than that of the normal cell, and the charge capacity is greater than the discharge capacity by p 3%, then the cell is determined as the micro-short-circuit cell, wherein p 1 = 2, p 2=3, and p 3=5. S1, predicting a mean state of charge SOC mean of a battery pack and a difference (dSOC) between the state of charge of each cell and the mean state of charge of the battery pack, and then obtaining SOC of each cell; S2, calculating transferred charge quantity and SOC variable quantity of each cell at every moment under charge and discharge conditions, and then utilizing a least square method to estimate the capacity of each battery cell under the charge and discharge conditions; and S3, comparing estimated results of each charge and discharge capacity of the battery cell, wherein the battery cells with similar capacity and similar charge and discharge capacity are normal cells; the cell with the estimated value under the discharge condition less than that of the normal cell and the estimated value under the charge condition greater than that of the normal cell is a micro-short-circuit cell; the cell with the estimated value less than that of the normal cell under both the charge and discharge conditions is the small-capacity cell, wherein in the step S3, the normal battery cell with similar capacity and similar charge and discharge capacity refers to that the result of the capacity of the cell estimated at a certain time is consistent with that of a majority of cells, that is, a median deviation from the cell capacity is within p 1%, and the difference between the charge capacity and the discharge capacity is within p 1%; and under both the charge and discharge conditions, if the estimated value is less than that of the normal cell by more than p 2%, and the difference between the charge capacity and the discharge capacity is within p 1%, then the cell is determined as the small-capacity cell; if the estimated value under the discharge condition is less than that of the normal cell, while the estimated value under the charge condition is greater than that of the normal cell, and the charge capacity is greater than the discharge capacity by p 3%, then the cell is determined as the micro-short-circuit cell, wherein p 1 = 2, p 2=3, and p 3=5.