– The Madeira project, part of the Celtic Initiative1 , investigates the use of a fully distributed, policy-based network management framework that exploits the peer-to-peer paradigm with the aim of providing a successful solution to Next Generation Networks (NGN) challenges. This paper is focused on the distributed policy-based approach adopted in the project. Thanks to this approach, the management system is flexible and adaptable to different management applications of networks with time-varying topologies. Currently available results coming from the execution of specific scenarios in the area of Fault Management reveal that the policy-based system architecture works properly in the highly distributed peer-to-peer environment where it is deployed.