A thermodynamically-based work potential theory for modelling progressive damage and failure in fibre-reinforced laminates is presented. The current, multiple-internal state variable (ISV) formulation, enhanced Schapery theory, utilises separate ISVs for modelling the effects of damage and failure. Damage is considered to be the effect of any structural changes in a material that manifest as pre-peak non-linearity in the stress versus strain response. Conversely, failure is taken to be the effect of the evolution of any mechanisms that results in post-peak strain softening. It is assumed, matrix microdamage is the dominant damage mechanism in continuous, fibre-reinforced, polymer matrix laminates, and its evolution is captured with a single ISV. Three additional ISVs are introduced to account for failure due to mode I transverse cracking, mode II transverse cracking, and mode I axial failure. Using the stationarity of the total work potential with respect to each ISV, a set of thermodynamically consistent evolution equations for the ISVs is derived. Typically, failure evolution (i.e. post-peak strain softening) results in pathologically mesh dependent solutions within a finite element method numerical setting. Therefore, consistent characteristic element lengths are introduced into the formulation of of the three failure potentials. The theory is implemented into commercial FEM software. The model is verified against experimental results from a laminated, quasi-isotropic, T800/3900-2 panel containing a central notch. Global load versus displacement, global load versus local strain gauge data, and macroscopic failure paths obtained from the models are compared to the experiments. Finally, a sensitivity study is performed on the failure parameters used in the model.