This paper deals with fault-tolerant control (FTC) of an induction motor (IM) drive. An inter-turn short circuit (ITSC) of the stator windings was taken into consideration, which is one of the most common internal faults of induction machines. The sensitivity of the classic, well-known voltage and current models to the stator winding faults was analyzed. It has been shown that these classical state variable estimators are sensitive to induction motor parameter changes during stator winding failure, which results in unstable operation of the direct field-oriented control (DFOC) drive. From a safety-critical applications point of view, it is vital to guarantee stable operation of the drive even during faults of the machine. Therefore, a new FTC system has been proposed, which consists of new modified rotor flux estimators, robust to stator winding faults. A detailed description of the proposed system is presented herein, as well as the results of simulation and experimental tests. Simulation analyses were performed using MATLAB/Simulink software. Experimental tests were carried out on the experimental test bench with a dSpace DS1103 card. The proposed solution could be applied as an alternative rotor flux estimation technique for the modern FTC drive.