The method first uses a direct subtraction and an elimination procedure to detect defects. Further, it uses three indices (1) the type of object detected, (2) the difference in object numbers, and (3) the difference in background numbers between the inspected image and the template to classify each detected defect into one of the seven defect types. If the defect is identified as positive or negative deformation, then a deformation allowance test is checked to determine whether the deformation is acceptable or not.