Laser Powder Deposition technique is an advanced production method with many applications. Despite this fact, reliable and accurate control schemes have not yet fully developed for this method. This article presents method for in time identification of the process for modeling and adaptation of proper control strategy. ARMAX structure is chosen for system model. Recursive least square method and Kalman Filter methods are adopted for system identification, and their performance are compared. Experimental data was used for system identification, and proper filtering schemes are devised here for noise elimination and increased estimation results. It was concluded that although both methods yield efficient performance and accurate results, Kalman Filter method gives better results in parameter estimations. The comparison of the results shows that this method can be used very efficiently in control and monitoring of Laser Powder Deposition process.