In this paper, a compact four-degree-of-freedom (4-DOF) measurement system is presented. With a special optical configuration, the pitch error, yaw error, and two straightness errors of the moving target are able to be detected by only a single laser beam from a collimated laser diode. A 2D hybrid mirror angle steering mount is designed to perform the large angle turning for the axis alignment and very fine angle tuning by PZT actuators for real-time beam drift compensation. A series of calibration and comparison experiments have been carried out to verify the performance of the proposed system. The developed active compensation system could effectively suppress the beam's angular drift to within ± 0.01 arc-sec in both of yaw and pitch directions. The developed 4-DOF measuring system is compact, low cost, and suitable for long distance geometric error measurement of linear stages.