Active thruster control is an important problem in AUV. One of the way to tackle this problem is to make the dynamic system like AUV as adaptive and self-controlling. This article discusses the fault tolerant controller design with periodic output feedback for Autonomous Underwater Vehicle using multi model approach. The entire system is modelled in state space. Assuring high degree of reliability and persisting autonomy under thruster failure the controller has to be designed such that the thrust distribution is effectively controlled if any one of the signals and corresponding thrusters fails. The AUV is modelled in six degrees of freedom having six inputs and six outputs. Four thrusters are used for vertical and horizontal movements in AUV. Fault tolerant controller is designed for depth control of AUV, with periodic output feedback gains with multi model approach. To each thruster failure the multi model is presented with the gain matrix having all off diagonal terms zero. The designed robust fault tolerant controller with periodic output feedback with multi model approach provides satisfactory stabilization to AUV depth system.