A new method employing x-axis (horizontal) compensation system is introduced to reduce the magnetic noise measured in y-axis (vertical) in a separate shell magnetic shield. Due to the construction of the separate shell magnetic shield the x-axis incident magnetic field is redistributed generating a y-axis components affecting the operation of the sensors used in MCG measurements. The new method utilizes an active compensation system in x-direction to reduce both the gradient of magnetic field in y-direction and time varying magnetic noise generated in y-axis due to x-axis magnetic fields. Finally, a practical implementation of the adopted active compensation scheme is presented in order to reduce the cross effect from x-axis magnetic fields on y-axis.