The form error of linear guides severely affects the positioning accuracy of Cartesian three axis machine tools, and the detrimental effect sensibly reduces the accuracy as the travel length increases. The present work illustrates a technique allowing the computation of the overall positioning error on the tool holder of a three axis Cartesian machine as a function of the elementary geometrical (or form) errors characterising the three motion axes. The overall positioning error is expressed as an error vector acting on the tool holder, and is obtained as a combination of the 3 linear and 3 angular form errors measured for each linear motion axis. The vector field representing the positioning error can be used by the computer numerical control as an error compensation reference. The technique has been successfully implemented on the CNC of a large three axis milling machine. Furthermore, the measurement of angular errors can be repeated on-line, at a regular time schedule, by mean of servo-controlled inclinometers mounted on the machine elements. This allows to keep up-to-date the compensation algorithm used by the CNC. The second part of the paper investigate the feasibility of this on-line calibration of the error compensation algorithm, by means of a simplified breadboard