diff --git a/src/lib/sovd-api.ts b/src/lib/sovd-api.ts
index 69fe9df..d7ae6cd 100644
--- a/src/lib/sovd-api.ts
+++ b/src/lib/sovd-api.ts
@@ -1738,26 +1738,44 @@ export class SovdApiClient {
      * @param onError Callback for errors
      * @returns Cleanup function to close the connection
      */
-    subscribeFaultStream(onFault: (fault: Fault) => void, onError?: (error: Error) => void): () => void {
+    subscribeFaultStream(
+        onFaultConfirmed: (fault: Fault) => void,
+        onFaultCleared: (fault: Fault) => void,
+        onError?: (error: Error) => void
+    ): () => void {
         const eventSource = new EventSource(this.getUrl('faults/stream'));
 
-        eventSource.onmessage = (event) => {
+        const parseFault = (event: MessageEvent): Fault | null => {
             try {
-                // API may return raw fault format that needs transformation
+                // API returns: { event_type, fault, timestamp }
                 const rawData = JSON.parse(event.data);
-                // Check if this is the raw API format (has fault_code) or already transformed
-                if ('fault_code' in rawData) {
-                    const fault = this.transformFault(rawData);
-                    onFault(fault);
-                } else {
-                    // Already in Fault format
-                    onFault(rawData as Fault);
+                const faultData = rawData.fault || rawData;
+                if ('fault_code' in faultData) {
+                    return this.transformFault(faultData);
                 }
+                return faultData as Fault;
             } catch {
                 onError?.(new Error('Failed to parse fault event'));
+                return null;
             }
         };
 
+        eventSource.addEventListener('fault_confirmed', (event: MessageEvent) => {
+            const fault = parseFault(event);
+            if (fault) onFaultConfirmed(fault);
+        });
+
+        eventSource.addEventListener('fault_cleared', (event: MessageEvent) => {
+            const fault = parseFault(event);
+            if (fault) onFaultCleared(fault);
+        });
+
+        // Fallback for unnamed events - treat as confirmed
+        eventSource.onmessage = (event: MessageEvent) => {
+            const fault = parseFault(event);
+            if (fault) onFaultConfirmed(fault);
+        };
+
         eventSource.onerror = () => {
             onError?.(new Error('Fault stream connection error'));
         };
diff --git a/src/lib/store.ts b/src/lib/store.ts
index 64cb852..76c8c9a 100644
--- a/src/lib/store.ts
+++ b/src/lib/store.ts
@@ -557,6 +557,10 @@ export const useAppStore = create<AppState>()(
 
                     // Load root entities after successful connection
                     await get().loadRootEntities();
+
+                    // Subscribe to fault stream for real-time toast notifications
+                    get().subscribeFaultStream();
+
                     return true;
                 } catch (error) {
                     const message = error instanceof Error ? error.message : 'Connection failed';
@@ -573,6 +577,9 @@ export const useAppStore = create<AppState>()(
                 // Stop execution polling
                 get().stopExecutionPolling();
 
+                // Unsubscribe from fault stream
+                get().unsubscribeFaultStream();
+
                 set({
                     serverUrl: null,
                     baseEndpoint: '',
@@ -1392,6 +1399,7 @@ export const useAppStore = create<AppState>()(
                 }
 
                 const cleanup = client.subscribeFaultStream(
+                    // onFaultConfirmed
                     (fault) => {
                         const { faults } = get();
                         // Add or update fault in the list
@@ -1407,6 +1415,15 @@ export const useAppStore = create<AppState>()(
                         }
                         toast.warning(`Fault: ${fault.message}`, { autoClose: 5000 });
                     },
+                    // onFaultCleared - no toast here, clearFault() already shows one for UI-triggered clears
+                    (fault) => {
+                        const { faults } = get();
+                        const newFaults = faults.filter(
+                            (f) => !(f.code === fault.code && f.entity_id === fault.entity_id)
+                        );
+                        set({ faults: newFaults });
+                    },
+                    // onError
                     (error) => {
                         toast.error(`Fault stream error: ${error.message}`);
                     }