The aim of the paper is to present a dynamic control allocation architecture for the design and development of reconfigurable and fault-tolerant control systems in aerial vehicles. The baseline control system is designed for the nominal dynamics of the aircraft, while faults and actuator saturation limits are handled by the dynamic control allocation scheme. Coordination of these components is provided by a supervisor which re-allocates control authority based on health information, flight envelope limits and cross coupling between lateral and longitudinal motion. The monitoring components and FDI filters provide the supervisor with information about different fault operations, based on that it is able to make decisions about necessary interventions into the vehicle motions and guarantee fault-tolerant operation of the aircraft. The design of the proposed reconfigurable control algorithm is based on Linear Parameter-varying (LPV) control methods that uses a parameter dependent dynamic control allocation scheme. The design is demonstrated on the lateral axis motion of the NASA AirSTAR Flight Test Vehicle simulation model.