The Cooperative Research Centre for Railway Engineering and Technologies has a research project focused upon developing low cost vehicle ride quality detection systems. This paper presents the development of a device which gives indications of wheel unloading and L/V offering both warnings and the opportunity for prevention of derailment. A vehicle based instability prediction system has been developed using measured accelerations of the wagon body as inputs to an inverse wagon model. Numerical integration of the system is then used to get the kinematic quantities of wheelsets. The vertical wheel-rail interface force can be determined by the sum of Hertzian spring and damping forces between wheel and rail. The lateral wheel rail force is then determined by Kalker’s theory. A laboratory test was designed to compare the results between inverse model and measurement. Results show the estimated results match well with the results from laboratory test. Additional validation was also achieved by comparison with wagon simulations developed using VAMPIRE.