This paper presents a novel aided navigation method for AUV (Autonomous Underwater Vehicles). The navigation system for AUV includes several sensors such as IMU (Inertial Measurement Unit), DVL (Doppler Velocity Log) and depth sensor. In general, the $13^{th}$ order INS error model, which includes depth error, velocity error, attitude error, and the accelerometer and gyroscope biases as state variables is used with measurements from DVL and depth sensors. However, the model may degrade the estimation performance of the heading state. Therefore, the $11^{th}$ INS error model is proposed. Its validity is verified by using a degree of observability and analyzing steady state error. The performance of the proposed model is shown by the computer simulation. The results show that the performance of the reduced $11^{th}$ order error model is better than that of the conventional $13^{th}$ order error model.