An algorithm of operational modal analysis in time domain is presented for the discrimination between structural modes, harmonic excitations and spurious modes. A classification factor is developed and based on the construction of the damped signal-to-noise ratio which separates the physical modes from the numerical ones. The harmonic excitations are then recognized at very high power indexes and zero damping. Furthermore, after the modal discrimination, the harmonic spectrum and the estimated frequency response function can be derived. The method can be updated in the time domain either by a short time sliding window or a recursive technique to provide the modal monitoring in both stationary and non-stationary process. An industrial application on a hydro-electrical generator is discussed to identify the machine frequencies under operational working conditions.