This study proposes a novel FSM compensation system for four degrees of freedom (DOF) laser errors compensation, which has the advantage of shorter optical path length, fewer elements and an easier set-up process, meaning that it can be used at different locations. A commercial software, Zemax, is used to evaluate the function of the proposed FSM compensation system and the mathematical modelling of the proposed FSM compensation system is established by using a skew-ray tracing method. Finally, the proposed FSM compensation system is then verified experimentally using a laboratory-built prototype and the result shows that the proposed FSM compensation system achieves the ability to compensate the 4 DOF of the laser source.