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This paper discusses a hierarchical online fault-adaptive control approach for Advanced Life Support (ALS) Systems. ALS systems contain a number of complex interacting subsystems. To avoid complexity in the models and online analysis, diagnosis and fault-adaptive control is achieved by local units. To maintain overall performance, the problem of resource management for contending concurrent subsystems has to be addressed. We implement a control structure, where predefined set-point specifications for system operation are used to derive optimizing utility functions for the subsystem controllers. We apply this approach in situations where a fault occurs in a system, and once the fault is isolated and identified, the controllers use the updated system model to derive new set point specifications and utility functions for the faulty system.