First ply failure in brittle matrix composites usually indicates generation of transverse cracks in a ply. In a laminate, these cracks cannot cause failure since they are constrained by fibers in adjoining laminae. Many investigators are studying stiffness loss due to such cracks under transverse tensile stresses. In this work, use is first made of a phenomenological approach that models the response of homogeneous materials that have a large number of possible microcrack planes with different orientations in space. Densities of cracks of similar orientation can be treated as internal variables in the strain (or complementary) energy, which is also a function of the average strains (or stresses) over a representative volume element. The energy formulation is employed to model the response of a lamina under combined stresses containing cracks parallel to fibers. Estimates of the change in complementary energy due to the dilute concentration of cracks in a ply as obtained from simple solutions and results reported in literature are utilized to calculate the increase in compliance. Crack initiation and growth are predicted by the use of criteria which are similar to those used for homogeneous media. Results are compared with test data for ( ± θ)ns layups for small and moderate crack densities. A relationship is established between the phenomenological and fracture mechanics-based approaches for the particular case of cross ply layups with large crack densities. Results are compared with test data. Advantages and limitations of both approaches are discussed.