The attempt to integrate the applications of conventional structural deformation reconstruction strategies and vibration-based damage identification methods is made in this study, where, more specifically, the inverse finite element method (iFEM) and pseudo-excitation approach (PE) are combined for the first time, to give rise to a novel structural health monitoring (SHM) framework showing various advantages, particularly in aspects of enhanced adaptability and robustness. As the key component of the method, the inverse finite element method (iFEM) enables precise reconstruction of vibration displacements based on measured dynamic strains, which, as compared to displacement measurement, is much more adaptable to existing on-board SHM systems in engineering practice. The PE, on the other hand, is applied subsequently, relying on the reconstructed displacements for the identification of structural damage. Delamination zones in a carbon fibre reinforced plastic (CFRP) laminate are identified using the developed method. As demonstrated by the damage detection results, the iFEM-PE method possesses apparently improved accuracy and significantly enhanced noise immunity compared to the original PE approach depending on displacement measurement. Extensive parametric study is conducted to discuss the influence of a variety of factors on the effectiveness and accuracy of damage identification, including the influence of damage size and position, measurement density, sensor layout, vibration frequency and noise level. It is found that different factors are highly correlated and thus should be considered comprehensively to achieve optimal detection results. The application of the iFEM-PE method is extended to better adapt to the structural operational state, where multiple groups of vibration responses within a wide frequency band are used. Hybrid data fusion is applied to process the damage index (DI) constructed based on the multiple responses, leading to detection results capable of indicating delamination positions precisely.