Increase of wind turbine availability is one of the main goals in wind energy research trends. The paper concerns with avoiding wind turbine shut-down under generator stator insulation degradation. We propose a fault-tolerant control that modulates the machine magnetic ﬂux and reallocates the electrical stress from faulty to healthy generator stator parts, and extracts the maximum available power in the faulty operation under a strict condition of stopping further fault propagation. The algorithm is set for the case of 700 kW wind turbine with direct-drive permanent magnet synchronous generator but can be applied for any other type of generator as well. Proposed method is suitable for a wide range of generator operation and fault conditions, from early stage of fault-development to inter-turn short circuit. The method is also conceived as a modular extension to the conventional wind turbine control system. Simulation results are obtained and possible wind turbine operating area under different stage of fault is mapped.