In this paper, the adverse effects of variation in operating temperature, on the performance of PM sensors and actuators used in aerospace and military applications, and methods to provide inherent temperature compensation by design, are presented. Unlike the conventional shunt compensation, the proposed method uses the direct leakage path between two neighboring permanent magnets. This novel method arrived at after conducting finite element (FE) analysis, is capable of giving complete temperature compensation over the entire operating temperature range. In a gyroscope designed and developed under this scheme, the temperature sensitivity of the torquer scale factor of the gyroscope in an operating temperature range of -60 to +80 degreesC is measured to be less than -10 ppm/degreesC against the normal value of -450 ppm/degreesC, observed in a gyroscope having no inherent temperature compensation.