Automated Fibre Placement (AFP) is a new robot technology that has the advantages of both the rapid manufacturing process and reducing material waste. However, new types of defects are introduced into the composite structures when using the fibre tows instead of composite prepreg sheets. These defects can cause geometrical discontinuities and local material inhomogeneities. Although the effect of these defects on the in-plane mechanical performance of composite structures can be found in the literature, there is still a lack of knowledge in studying the out-of-plane and impact response of the composite laminates. The main objective of this research study is to investigate the effect of induced tow-gaps on the Low-Velocity Impact (LVI) response and Compression After Impact (CAI) response of the thin composite plates. For this purpose, defective quasi-isotropic composite plates have been manufactured with the AFP technique. Two millimetres of tow-gaps are embedded in all composite plies to provide an average of 8% of pre-cured volumetric gaps in all specimens. The test specimens are subjected to impact loads with impact energies of 5 J, 10 J, and 15 J, and the corresponding impact response and projected delamination of the defective plates are compared with the baseline sample. Delamination areas are measured using the Ultrasonic C-scan technique. CAI tests are carried out to evaluate the residual compressive strengths of the defective impacted samples. Furthermore, Digital Image Correlation (DIC) technique is used during the CAI tests to measure the in-plane strains of the specimen under compressive loading. Effect of the curing process on the gap formation is evaluated by measuring the Induced Gap Shrinkage Factor (IGSF) using microscopic observation. This factor is used for numerical simulation of the defective composite plates. Additional tests on beams are performed to evaluate the out-of-plane response of the defective beams. Three-point bending tests are carried out on both short and standard beams to measure the interlaminar shear strength and flexural stiffness/strength of the composite beams with tow-gaps. Furthermore, Induced Defect Layer Method (IDLM), a robust meso-macro model, is developed for damage analysis of the defective laminates. This method uses a geometrical parameter to incorporate induced gaps in the elastic, inelastic, and softening behaviour of the material. The main advantage of the proposed method is that a novel homogenization technique is used to include tow gaps in composite damage analysis of defective laminates. In addition, IDLM evaluates the mechanical response of the defective laminates with acceptable precision and less computational time compared to the current numerical models. Results indicate that tow-gaps can reduce the impact resistance of the composite plates by about 17% for low levels of impact energy. It is also shown that the interaction of induced gaps and impact damage at the compressive residual strength reduction of impacted thin composite plates is significant and cannot be neglected. Numerical results show that the IDLM is a robust method for damage analysis of the composite laminates with induced gaps.