Dimensional error measurement for stepped workpiece profiles has been achieved by a new proximity sensor using a pneumatic technique. Static analysis and simulation results were used in designing the sensor for application to a bench-type lathe. This sensor consists of three sensing nozzles and can continuously measure the dimensional error of a stepped workpiece by one of these three sensing nozzles in accordance with the computer programme. Any deviation in the distance between the sensing head and the workpiece surface results in a change in the sum of the outputs from the sensor. Comparison with the results obtained by a Universal Measuring Microscope shows the effectiveness of the new system in on-machine measurement.