To address challenges arising in the safety assessment of critical engineering systems, research has recently focused on automating the synthesis of predictive models of system failure from design representations. In one approach, known as compositional safety analysis, system failure models such as fault trees and Failure Modes and Effects Analyses (FMEAs) are constructed from component failure models using a process of composition. Another approach has looked into automating system safety analysis via application of formal verification techniques such as model checking on behavioural models of the system represented as state automata. So far, compositional safety analysis and formal verification have been developed separately and seen as two competing paradigms to the problem of model-based safety analysis. This thesis shows that it is possible to move forward the terms of this debate and use the two paradigms synergistically in the context of an advanced safety assessment process. The thesis develops a systematic approach in which compositional safety analysis provides the basis for the systematic construction and refinement of state-automata that record the transition of a system from normal to degraded and failed states. These state automata can be further enhanced and then be model-checked to verify the satisfaction of safety properties. Note that the development of such models in current practice is ad hoc and relies only on expert knowledge, but it being rationalised and systematised in the proposed approach - a key contribution of this thesis. Overall the approach combines the advantages of compositional safety analysis such as simplicity, efficiency and scalability, with the benefits of formal verification such as the ability for automated verification of safety requirements on dynamic models of the system, and leads to an improved model-based safety analysis process. In the context of this process, a novel generic mechanism is also proposed for modelling the detectability of errors which typically arise as a result of component faults and then propagate through the architecture. This mechanism is used to derive analyses that can aid decisions on appropriate detection and recovery mechanisms in the system model. The thesis starts with an investigation of the potential for useful integration of compositional and formal safety analysis techniques. The approach is then developed in detail and guidelines for analysis and refinement of system models are given. Finally, the process is evaluated in three cases studies that were iteratively performed on increasingly refined and improved models of aircraft and automotive braking and cruise control systems. In the light of the results of these studies, the thesis concludes that integration of compositional and formal safety analysis techniques is feasible and potentially useful in the design of safety critical systems.