Based on the image of point cloud, a detection algorithm for cracks and water seepage area identification in multi-scale space is proposed. According to the physical features of tunnel cracks in different scale, meanwhile, with the definition of scale space, a fusion image detection operator is developed to maintain the stability of ribbon like cracks detection, at the same time, to restore the sensitivity to the small cracks in high gray value for obtaining more edge pixels. Therefore, the identification and detection of multi-scale cracks and seepage are achieved with the application of proposed algorithm. It is proved by an example that the algorithm can effectively eliminate the interference of fake cracks, and accurately identify and locate cracks in different scales.