A solution for compensating a magnetic field sensor to permit detection of a small magnetic field in the presence of a large magnetic field is disclosed. A magnetic field sensor detects the magnetic field which produces an analog signal then encoded by an analog to digital converter (ADC) into a digital stream. A controller operating on the digital stream incorporates additional sensor data to create a compensation signal which is sent to a digital to analog (DAC) converter. This compensation signal then modifies the output of the magnetic field sensor before entering the ADC. Compensation is software controlled, and is thus adaptable to numerous conditions requiring compensation. Apart from being easily tunable, the compensation may respond dynamically to changing conditions. The invention has particular application to airborne electromagnetic surveying where small fields scattered from the Earth are measured in the presence of a large transmitted field.