In this paper, a direct adaptive control scheme is proposed for a faulty helicopter using the outer loop compensation technique. Firstly, the model reference adaptive control is introduced, which is used for designing the fault tolerant control system of helicopter. Secondly, an outer-loop adaptive compensator is designed for improving the self-repairing capability of the model reference adaptive control approach. Finally, simulation results on a linear varying-parameter helicopter control system are given to illustrate the effectiveness and feasibility of the presented direct adaptive control approach using outer loop compensation technique.