To enhance the transverse mode instability (TMI) threshold of a fiber oscillator, a novel configuration is presented. In this configuration the oscillator cavity length is considerably reduced and the remaining active fiber is released out of the cavity to absorb the rest of the pump power and amplify the output signal of the cavity. In fiber oscillators, the index gratings generated by both forward and backward propagating signals can interact with light propagating in the backward and forward directions and degrade the output beam quality. In the proposed modified configuration, due to lower intra-cavity forward and backward signal power the index grating is smoothed and the TMI threshold is increased. Experimental results indicate that this modified configuration has a higher TMI threshold than a conventional fiber oscillator. Finally a higher TMI threshold is achieved in the bidirectional pumping scheme of the modified configuration.