All-fiber optical current sensor (AFOCS) is a perfect product formed by the combination of fiber-optic sensing technology and the Faraday effect. It boasts significant advantages such as resistance to electromagnetic interference, a high measurement dynamic range and precision, low power consumption, low cost, and insulation. Additionally, it enables long-distance transmission, making it one of the main devices for current monitoring in smart grids. However, the birefringence within the sensing fiber is highly susceptible to changes in temperature, causing the polarization state of light to be extremely sensitive to temperature variations. This sensitivity significantly impacts the accuracy of current measurements. A novel loop structure AFOCS with a coupled fiber polarization rotator (FPR) is introduced in this paper. The operating principle of this structure is theoretically analyzed, and the Jones matrix is used to analyze the output light intensity signal and derive the error formula. After comparing the measurement accuracy of the basic AFOCS and the loop structure AFOCS, it is demonstrated that this novel structure can improve current sensitivity by enhancing the temperature robustness of the system. Additionally, the error generated by the FPR is controlled below 1%, meeting the requirements for stable system operation. Therefore, this novel structure effectively improves the accuracy of current measurement and exhibits strong temperature stability.