A system and method for engine control and diagnostics are described. The engine system may include an engine having a catalyst in the exhaust system, the exhaust system further having an exhaust gas oxygen sensor upstream of the catalyst and downstream of the catalyst. In one example, the method may include during a first operating mode in which catalyst diagnostics are not carried out, adjusting air-fuel ratio based on both the upstream and downstream exhaust gas oxygen sensors, where air-fuel ratio adjustment responsiveness to the downstream sensor is reduced as the catalyst performance degrades; and during a second operating mode that includes catalyst diagnostics, adjusting air-fuel ratio based on at least the downstream exhaust gas oxygen sensor, where said air-fuel ratio adjustment responsiveness to the downstream sensor is temporarily increased from said reduction generated during the first operating mode.