In the present work, a procedure for the estimation of internal damping in a cracked rotor system is described. The internal (or rotating) damping is one of the important rotor system parameters and it contributes to the instability of the system above its critical speed. A rotor with a crack during fatigue loading has rubbing action between the two crack faces, which contributes to the internal damping. Hence, internal damping estimation also can be an indicator of the presence of a crack. A cracked rotor system with an offset disc, which incorporates the rotary and translatory of inertia and gyroscopic effect of the disc is considered. The transverse crack is modeled based on the switching crack assumption, which gives multiple harmonics excitation to the rotor system. Moreover, due to the crack asymmetry, the multiple harmonic excitations leads to the forward and backward whirls in the rotor orbit. Based on equations of motions derived in the frequency domain (full spectrum), an estimation procedure is evolved to identify the internal and external damping, the additive crack stiffness and unbalance in the rotor system. Numerically, the identification procedure is tested using noisy responses and bias errors in system parameters.