In this article, the stability problem of the stator current error-based model reference adaptive system (MRAS) speed estimator for induction motor drive is discussed. The MRASCC that is analyzed in this article is created with a rotor flux simulator based on the stator current (first superscript C) and the stator current estimator (second superscript C), both adapted with the estimated rotor speed. As the original estimator is unstable in the regenerating mode, a simple stability extension solution is proposed based on the introduction of an auxiliary variable in the mathematical model of this estimator. The new adaptation rule is derived using the Lyapunov theory and stability range of a modified speed estimator is determined. This modification is compared with the existing solutions and analyzed in the simulation and experimental tests under motoring and regenerating modes of the drive system in open and closed–loop operation. It has been shown that the modified speed estimator with an additional variable adapted on-line is stable in the whole regenerating mode, contrary to the classical solution and does not require any modifications during the change from the regenerating to motoring mode and vice versa, as it is required in existing solutions.