The paper deals with the recursive identification of time-varying non-linear dynamic systems using three-block cascade models with non-linear static, linear dynamic and non-linear dynamic blocks. These models are appropriate for systems with both actuator and sensor non-linearities. Multiple application of a decomposition technique provides special expressions for the corresponding non-linear model description that are linear in parameters. A modified recursive least-squares-based algorithm is used for estimation of the time-varying input polynomial and output backlash parameters. Simulation studies show the feasibility of proposed approach to estimate the model parameters and track their changes.