Magnetic Flux Leakage (MFL) testing is widely used to detect defects in pipelines, rail track and other structures. The measurement of the two field components perpendicular to the test surface and parallel to the applied field in MFL systems is well established. This work explores the advantages of extending this technique to include the y-axis, orthogonal to the material surface and the applied field, by employing a high-sensitivity three-axis magnetic field sensor. Several MFL tests were undertaken on steel samples, including a section of rail track. Test results show that data from the y-axis can give additional positional information about defects, being especially advantageous where the defect is aligned close to parallel to the applied field. The work concludes that 3D magnetic field sensing could be used to improve the defect characterisation capabilities of existing MFL systems, especially where defects have irregular geometries.