A cross-sectional study of postural sway analysis in older non-fallers, once-fallers and multiple-fallers using five common standing tests was conducted. Eighty-six older subjects with an average age of 80.4 years (SD ± 7.9) participated in the study. The angular rotation and velocity of the trunk of the participants in the roll (lateral) and pitch (sagittal) planes were recorded using an inertial sensor mounted on their lower backs. The Gaussian Mixture Models (GMM), Expectation-Maximisation (EM) and the Minimum Message Length (MML) algorithms were applied to the acquired data to obtain an index indicative of the body sway. The standing with feet together and standing with one foot in front, sway index distinguished older fallers from non-fallers with specificity of 75.7% and 77.7%, respectively, and sensitivity of 78.6% and 82.1%, respectively. This compares favourably with the Berg Balance Scales (BBS) with specificity of 70.5% and sensitivity of 75.3%. The results suggest that the proposed method has potential as a protocol to diagnose balance disorder in older people.