Dear Oleg:
Thank you very much for your reply. What you suggested is very practical and also devoid disadvantages of updating wd in timer-isr because it has been made conditional . For even more critical applications, one can make these conditions harder to met for example by assigning two different bits that are set in different parts of the routine. One error condition that is very probable is trapping within an infinite loops, for example firmware waits for a pin to go high and it will never go. I think if one wants to implement a conditional wd update in timer isr then he should be careful that in infinite loops the condition never met. For example :

LOOP: SETB FLG_WATCHDOG
            JNB P1.0, LOOP
Above code can be dangerous.

I’ll appreciate your further comments.
Thank you very much.