Abstract: In this paper a new concept of working mode of the compensating function of an automatic level is introduced.After having investigated several kinds of typical and actual working mode,the author got a method of converting the above actual working mode into a fundamental one by an equivalent transformation.Through analysing two types of automatic levels Ni-007 and Ni-1,the author derived a formula respectively for computing the total amount of compensation and the geometrical condition of realizing the automatic levelling.