This invention provides a method of obtaining accurate measurements of polarization dependent loss and insertion loss during the tests aiming at measuring the polarization properties of optical components. This is achieved by taking into account every polarization disturbance in the line between generation of known states of polarization and the device under test. The method involves computing within a desired range of wavelengths either the transfer matrix of each polarization perturbing element or of all polarization perturbing elements as a whole, and compensating for errors introduced by these polarization perturbing elements.