This paper presents a practical solution to achieve a fault tolerant attitude control system capable of Fault Detection and Diagnosis (FDD). The novelty of our proposed strategy is in the accurate modeling of satellite dynamics by the Takagi-Sugeno method. Based on this model, an adaptive observer has been utilized to achieve fault diagnosis in reaction wheels of the Attitude Control System (ACS). For this, occurred faults in reaction wheels have been estimated using an adaptive algorithm which provides fault detection and identification abilities. Moreover in this paper, a recovery algorithm has been utilized combined with fault detection and identification algorithm to provide an advanced decision support system. In this regard, for undertaking the remedial actions, a backstepping feedback linearization control law has been considered, in which the estimated fault has been utilized. Accordingly, the boundedness of the attitude control error is guaranteed, despite actuators fault. The developed algorithms provide a significant degree of autonomy to effectively handle satellite operation in the presence of ACS faults without the ground segment intervention. Through extensive simulation results, the designed algorithms are shown to be robust and accurate. Also, designed algorithms are assessed through hardware in the loop test bed to evaluate their functions in a experimental situation.