A linear compensator tool for attachment to a machining apparatus having a rotatably driven spindle that can be advanced to a selected point in space comprising: a compensator member with an inner casing and an outer casing in sliding engagement, the compensating member having first and second ends, the first end having a coupling for mounting to the spindle of the machining apparatus for movement to the selected point in space, wherein the inner casing has a flange section and the outer casing has a shoulder for limiting movement of inner casing within outer casing; a tool holder shaft hub connected to the coupling for receiving a splined end of a shaft coupled to a machining tool and for rotating the machining tool with respect to the outer casing of the compensator member, wherein the tool holder shaft hub is configured to permit the shaft to move axially with respect to the tool holder shaft hub; a nose piece having a bore with an axis into which the machining tool is inserted and retained, the nose piece being mounted to the inner casing for axial movement of the nose piece relative to the outer casing between first and second positions; a bias member mounted between first and second ends that urges the inner casing toward the first position; and a stop member carried by the nose piece for contacting the surface of a workpiece, the stop member preventing further movement of the nose piece toward the workpiece, so that continued movement of the outer casing toward the point in space causes the shaft to move axially into the tool holder shaft hub and the inner casing to overcome the bias member and move from the first position toward the second position. a compensator member with an inner casing and an outer casing in sliding engagement, the compensating member having first and second ends, the first end having a coupling for mounting to the spindle of the machining apparatus for movement to the selected point in space, wherein the inner casing has a flange section and the outer casing has a shoulder for limiting movement of inner casing within outer casing; a tool holder shaft hub connected to the coupling for receiving a splined end of a shaft coupled to a machining tool and for rotating the machining tool with respect to the outer casing of the compensator member, wherein the tool holder shaft hub is configured to permit the shaft to move axially with respect to the tool holder shaft hub; a nose piece having a bore with an axis into which the machining tool is inserted and retained, the nose piece being mounted to the inner casing for axial movement of the nose piece relative to the outer casing between first and second positions; a bias member mounted between first and second ends that urges the inner casing toward the first position; and a stop member carried by the nose piece for contacting the surface of a workpiece, the stop member preventing further movement of the nose piece toward the workpiece, so that continued movement of the outer casing toward the point in space causes the shaft to move axially into the tool holder shaft hub and the inner casing to overcome the bias member and move from the first position toward the second position.