TbDyFe transducer with polarization maintaining fiber (PMF) is produced. An all polarization maintaining fiber M-Z interferometer is set up. Magnetic field sensing is realized with optical fiber by means of work point controlling method. This system has many advantages such as simple construction and anti-jamming. Especially it has solved the polarization instability. Responses of the system with the change of the DC signal and AC signal amplitude are measured. The smallest AC magnetic field 3×10^-10T is obtained in this system.