diff --git a/compiler/fn.v b/compiler/fn.v
index 219e02020f..8ba5779a89 100644
--- a/compiler/fn.v
+++ b/compiler/fn.v
@@ -33,7 +33,7 @@ mut:
 	is_decl       bool // type myfn fn(int, int)
 	defer_text    []string
 	//gen_types []string
-	fn_name_sp    ScannerPos
+	fn_name_token Tok
 }
 
 fn (p &Parser) find_var(name string) ?Var {
@@ -110,9 +110,8 @@ fn (p mut Parser) known_var(name string) bool {
 fn (p mut Parser) register_var(v Var) {
 	mut new_var := {v | idx: p.var_idx, scope_level: p.cur_fn.scope_level}
 	if v.line_nr == 0 {
-		spos := p.scanner.get_scanner_pos()
-		new_var.scanner_pos = spos
-		new_var.line_nr = spos.line_nr
+		new_var.token = p.cur_tok()
+		new_var.line_nr = new_var.token.line_nr
 	}
 	// Expand the array
 	if p.var_idx >= p.local_vars.len {
@@ -214,7 +213,7 @@ fn (p mut Parser) fn_decl() {
 			ref: is_amp
 			ptr: is_mut
 			line_nr: p.scanner.line_nr
-			scanner_pos: p.scanner.get_scanner_pos()
+			token: p.cur_tok()
 		}
 		f.args << receiver
 		p.register_var(receiver)
@@ -227,7 +226,7 @@ fn (p mut Parser) fn_decl() {
 	else {
 		f.name = p.check_name()
 	}
-	f.fn_name_sp = p.scanner.get_scanner_pos()
+	f.fn_name_token = p.cur_tok()
 	// C function header def? (fn C.NSMakeRect(int,int,int,int))
 	is_c := f.name == 'C' && p.tok == .dot
 	// Just fn signature? only builtin.v + default build mode
@@ -335,7 +334,7 @@ fn (p mut Parser) fn_decl() {
 	// Special case for main() args
 	if f.name == 'main__main' && !has_receiver {
 		if str_args != '' || typ != 'void' {
-			p.error_with_position('fn main must have no arguments and no return values', f.fn_name_sp)
+			p.error_with_tok('fn main must have no arguments and no return values', f.fn_name_token)
 		}
 	}
 	dll_export_linkage := if p.os == .msvc && p.attr == 'live' && p.pref.is_so {
@@ -440,7 +439,7 @@ fn (p mut Parser) fn_decl() {
 
 	if f.name == 'main__main' || f.name == 'main' || f.name == 'WinMain' {
 		if p.pref.is_test && !p.scanner.file_path.contains('/volt') {
-			p.error_with_position('tests cannot have function `main`', f.fn_name_sp)
+			p.error_with_tok('tests cannot have function `main`', f.fn_name_token)
 		}
 	}
 	// println('is_c=$is_c name=$f.name')
@@ -473,7 +472,7 @@ fn (p mut Parser) fn_decl() {
 		}
 	}
 	if typ != 'void' && !p.returns {
-		p.error_with_position('$f.name must return "$typ"', f.fn_name_sp)
+		p.error_with_tok('$f.name must return "$typ"', f.fn_name_token)
 	}
 	if p.attr == 'live' && p.pref.is_so {
 		//p.genln('// live_function body end')
@@ -536,10 +535,10 @@ fn (p mut Parser) check_unused_variables() {
 			break
 		}
 		if !var.is_used && !p.pref.is_repl && !var.is_arg && !p.pref.translated {
-			p.production_error('`$var.name` declared and not used', var.scanner_pos )
+			p.production_error_with_token('`$var.name` declared and not used', var.token )
 		}
 		if !var.is_changed && var.is_mut && !p.pref.is_repl && !p.pref.translated {
-			p.error_with_position( '`$var.name` is declared as mutable, but it was never changed', var.scanner_pos )
+			p.error_with_tok( '`$var.name` is declared as mutable, but it was never changed', var.token )
 		}
 	}
 }
@@ -699,6 +698,7 @@ fn (p mut Parser) fn_args(f mut Fn) {
 	if f.is_interface {
 		int_arg := Var {
 			typ: f.receiver_typ
+			token: p.cur_tok()
 		}
 		f.args << int_arg
 	}
@@ -714,7 +714,7 @@ fn (p mut Parser) fn_args(f mut Fn) {
 				is_arg: true
 				// is_mut: is_mut
 				line_nr: p.scanner.line_nr
-				scanner_pos: p.scanner.get_scanner_pos()
+				token: p.cur_tok()
 			}
 			// f.register_var(v)
 			f.args << v
@@ -757,7 +757,7 @@ fn (p mut Parser) fn_args(f mut Fn) {
 				is_mut: is_mut
 				ptr: is_mut
 				line_nr: p.scanner.line_nr
-				scanner_pos: p.scanner.get_scanner_pos()
+				token: p.cur_tok()
 			}
 			p.register_var(v)
 			f.args << v
diff --git a/compiler/parser.v b/compiler/parser.v
index 6b9a8e4785..982a7a241e 100644
--- a/compiler/parser.v
+++ b/compiler/parser.v
@@ -12,11 +12,11 @@ import (
 // TODO rename to Token
 // TODO rename enum Token to TokenType
 struct Tok {
-	tok      Token
-	lit      string
-	line_nr  int
+	tok      Token  // the token number/enum; for quick comparisons
+	lit      string // literal representation of the token
+	line_nr  int // the line number in the source where the token occured
 	name_idx int // name table index for O(1) lookup
-	col      int
+	col      int // the column where the token ends
 }
 
 struct Parser {
@@ -154,6 +154,7 @@ fn (v mut V) new_parser(scanner &Scanner, id string) Parser {
 	}
 	if p.pref.is_repl {
 		p.scanner.should_print_line_on_error = false
+		p.scanner.should_print_errors_in_color = false
 	}
 	v.cgen.line_directives = v.pref.is_debuggable
 	// v.cgen.file = path
@@ -163,11 +164,11 @@ fn (v mut V) new_parser(scanner &Scanner, id string) Parser {
 fn (p mut Parser) scan_tokens() {
 	for {
 		res := p.scanner.scan()
-		p.tokens << Tok {
+		p.tokens << Tok{
 				tok: res.tok
 				lit: res.lit
 				line_nr: p.scanner.line_nr
-				col: p.scanner.pos - p.scanner.last_nl_pos
+				col: p.scanner.pos - p.scanner.last_nl_pos        
 		}
 		if res.tok == .eof {
 				break
@@ -216,7 +217,7 @@ fn (p &Parser) cur_tok() Tok {
 
 fn (p &Parser) peek_token() Tok {
 	if p.token_idx >= p.tokens.len - 2 {
-		return Tok{tok:Token.eof}
+		return Tok{ tok:Token.eof }
 	}
 	tok := p.tokens[p.token_idx]
 	return tok
@@ -886,30 +887,13 @@ if p.scanner.line_comment != '' {
 }
 }
 
+/////////////////////////////////////////////////////////////////
 fn (p &Parser) warn(s string) {
-	println('warning: $p.scanner.file_path:${p.scanner.line_nr+1}: $s')
+	e := normalized_error( s )
+	println('warning: $p.scanner.file_path:${p.scanner.line_nr+1}: $e')
 }
 
-
-fn (p mut Parser) error_with_position(e string, sp ScannerPos) {
-	p.scanner.goto_scanner_position( sp )
-	p.error( e )
-}
-
-fn (p mut Parser) production_error(e string, sp ScannerPos) {
-	if p.pref.is_prod {
-		p.scanner.goto_scanner_position( sp )
-		p.error( e )
-	}else {
-		// on a warning, restore the scanner state after printing the warning:
-		cpos := p.scanner.get_scanner_pos()
-		p.scanner.goto_scanner_position( sp )
-		p.warn(e)
-		p.scanner.goto_scanner_position( cpos )
-	}
-}
-
-fn (p mut Parser) error(s string) {
+fn (p mut Parser) print_error_context(){
 	// Dump all vars and types for debugging
 	if p.pref.is_debug {
 		// os.write_to_file('/var/tmp/lang.types', '')//pes(p.table.types))
@@ -935,14 +919,53 @@ fn (p mut Parser) error(s string) {
 		print_backtrace()
 	}
 	// p.scanner.debug_tokens()
-	// Print `[]int` instead of `array_int` in errors
-	e := s.replace('array_', '[]')
-		.replace('__', '.')
-		.replace('Option_', '?')
-		.replace('main.', '')
-	p.scanner.error_with_col(e, p.tokens[p.token_idx-1].col)
 }
 
+fn normalized_error( s string ) string {
+	// Print `[]int` instead of `array_int` in errors
+	return s.replace('array_', '[]')
+	.replace('__', '.')
+	.replace('Option_', '?')
+	.replace('main.', '')
+}
+
+fn (p mut Parser) error_with_position(s string, sp ScannerPos) {
+	p.print_error_context()
+	e := normalized_error( s )
+	p.scanner.goto_scanner_position( sp )
+	p.scanner.error_with_col(e, sp.pos - sp.last_nl_pos)
+}
+
+fn (p mut Parser) warn_with_position(e string, sp ScannerPos) {
+	// on a warning, restore the scanner state after printing the warning:
+	cpos := p.scanner.get_scanner_pos()
+	p.scanner.goto_scanner_position( sp )
+	p.warn(e)
+	p.scanner.goto_scanner_position( cpos )
+}
+
+fn (p mut Parser) production_error_with_token(e string, tok Tok) {
+	if p.pref.is_prod {
+		p.error_with_tok( e, tok )
+	}else {
+		p.warn_with_token( e, tok )
+	}
+}
+
+fn (p &Parser) warn_with_token(s string, tok Tok) {
+	e := normalized_error( s )
+	println('warning: $p.scanner.file_path:${tok.line_nr+1}:${tok.col}: $e')
+}
+fn (p mut Parser) error_with_tok(s string, tok Tok) {
+	p.error_with_position(s, p.scanner.get_scanner_pos_of_token(tok) )
+}
+
+fn (p mut Parser) error(s string) {
+	// no positioning info, so just assume that the last token was the culprit:
+	p.error_with_tok(s, p.tokens[p.token_idx-1] )
+}
+/////////////////////////////////////////////////////////////////
+
 fn (p &Parser) first_pass() bool {
 	return p.pass == .decl
 }
@@ -1382,6 +1405,7 @@ fn (p mut Parser) statement(add_semi bool) string {
 // is_map: are we in map assignment? (m[key] = val) if yes, dont generate '='
 // this can be `user = ...`  or `user.field = ...`, in both cases `v` is `user`
 fn (p mut Parser) assign_statement(v Var, ph int, is_map bool) {
+	errtok := p.cur_tok()
 	//p.log('assign_statement() name=$v.name tok=')
 	is_vid := p.fileis('vid') // TODO remove
 	tok := p.tok
@@ -1436,8 +1460,7 @@ fn ($v.name mut $v.typ) $p.cur_fn.name (...) {
 		p.cgen.resetln(left + 'opt_ok($expr, sizeof($typ))')
 	}
 	else if !p.builtin_mod && !p.check_types_no_throw(expr_type, p.assigned_type) {
-		p.scanner.line_nr--
-		p.error('cannot use type `$expr_type` as type `$p.assigned_type` in assignment')
+		p.error_with_tok( 'cannot use type `$expr_type` as type `$p.assigned_type` in assignment', errtok)
 	}
 	if (is_str || is_ustr) && tok == .plus_assign && !p.is_js {
 		p.gen(')')
@@ -1488,7 +1511,7 @@ fn (p mut Parser) var_decl() {
 		}
 		typ := types[i]
 		// println('var decl tok=${p.strtok()} ismut=$is_mut')
-		var_scanner_pos := p.scanner.get_scanner_pos()
+		var_token := p.cur_tok()
 		// name := p.check_name()
 		// p.var_decl_name = name
 		// Don't allow declaring a variable with the same name. Even in a child scope
@@ -1515,8 +1538,8 @@ fn (p mut Parser) var_decl() {
 			typ: typ
 			is_mut: is_mut
 			is_alloc: p.is_alloc || typ.starts_with('array_')
-			scanner_pos: var_scanner_pos
-			line_nr: var_scanner_pos.line_nr
+			line_nr: var_token.line_nr
+			token: var_token
 		})
 		//if p.fileis('str.v') {
 			//if p.is_alloc { println('REG VAR IS ALLOC $name') }
@@ -3783,7 +3806,7 @@ fn (p &Parser) prepend_mod(name string) string {
 
 fn (p mut Parser) go_statement() {
 	p.check(.key_go)
-	mut gopos := p.scanner.get_scanner_pos()
+	mut gotoken := p.cur_tok()
 	// TODO copypasta of name_expr() ?
 	if p.peek() == .dot {
 		// Method
@@ -3792,12 +3815,12 @@ fn (p mut Parser) go_statement() {
 			return
 		}
 		p.mark_var_used(v)
-		gopos = p.scanner.get_scanner_pos()
+		gotoken = p.cur_tok()
 		p.next()
 		p.check(.dot)
 		typ := p.table.find_type(v.typ)
 		method := p.table.find_method(typ, p.lit) or {
-			p.error_with_position('go method missing $var_name', gopos)
+			p.error_with_tok('go method missing $var_name', gotoken)
 			return
 		}
 		p.async_fn_call(method, 0, var_name, v.typ)
@@ -3807,11 +3830,11 @@ fn (p mut Parser) go_statement() {
 		// Normal function
 		f := p.table.find_fn(p.prepend_mod(f_name)) or {
 			println( p.table.debug_fns() )
-			p.error_with_position('can not find function $f_name', gopos)
+			p.error_with_tok('can not find function $f_name', gotoken)
 			return
 		}
 		if f.name == 'println' || f.name == 'print' {
-			p.error_with_position('`go` cannot be used with `println`', gopos)
+			p.error_with_tok('`go` cannot be used with `println`', gotoken)
 		}
 		p.async_fn_call(f, 0, '', '')
 	}
diff --git a/compiler/scanner.v b/compiler/scanner.v
index f9404e5843..b8bc2f1708 100644
--- a/compiler/scanner.v
+++ b/compiler/scanner.v
@@ -7,11 +7,14 @@ module main
 import (
 	os
 	strings
+	term
 )
 
 const (
 	single_quote = `\'`
 	double_quote = `"`
+	error_context_before = 2 // how many lines of source context to print before the pointer line
+	error_context_after = 2  // ^^^ same, but after
 )
 
 struct Scanner {
@@ -34,7 +37,9 @@ mut:
 	prev_tok Token
 	fn_name string // needed for @FN
 	should_print_line_on_error bool
+	should_print_errors_in_color bool
 	quote byte // which quote is used to denote current string: ' or "
+	file_lines   []string // filled *only on error* by rescanning the source till the error (and several lines more)
 }
 
 // new scanner from file.
@@ -71,6 +76,7 @@ fn new_scanner(text string) &Scanner {
 		text: text
 		fmt_out: strings.new_builder(1000)
 		should_print_line_on_error: true
+		should_print_errors_in_color: true
 	}
 }
 
@@ -98,6 +104,48 @@ fn (s mut Scanner) goto_scanner_position(scp ScannerPos) {
 	s.last_nl_pos = scp.last_nl_pos
 }
 
+// get_scanner_pos_of_token rescans *the whole source* till it reaches {t.line_nr, t.col} .
+fn (s mut Scanner) get_scanner_pos_of_token(t Tok) ScannerPos {
+	// This rescanning is done just once on error, so it is fine for now.
+	// Be careful for the performance implications, if you want to
+	// do it more frequently. The alternative would be to store
+	// the scanpos (12 bytes) for each token, and there are potentially many tokens.
+	tline := t.line_nr
+	tcol  := if t.line_nr == 0 { t.col + 1 } else { t.col - 1 }
+	// save the current scanner position, it will be restored later
+	cpos := s.get_scanner_pos()
+	mut sptoken := ScannerPos{}
+	// Starting from the start, scan the source lines
+	// till the desired tline is reached, then
+	// s.pos + tcol would be the proper position
+	// of the token. Continue scanning for some more lines of context too.
+	s.goto_scanner_position(ScannerPos{})
+	s.file_lines = []string
+	mut prevlinepos := 0
+	for {
+		prevlinepos = s.pos 
+		if s.pos >= s.text.len { break }		
+		if s.line_nr > tline + 10 { break }
+		////////////////////////////////////////
+		if tline == s.line_nr {
+			sptoken = s.get_scanner_pos()
+			sptoken.pos += tcol
+		}
+		s.ignore_line() s.eat_single_newline()
+		sline := s.text.substr( prevlinepos, s.pos ).trim_right('\r\n')
+		s.file_lines << sline
+	}
+	//////////////////////////////////////////////////
+	s.goto_scanner_position(cpos)
+	return sptoken
+}
+fn (s mut Scanner) eat_single_newline(){
+	if s.pos >= s.text.len { return }
+	if s.expect('\r\n', s.pos) { s.pos += 2 return }
+	if s.text[ s.pos ] == `\n` { s.pos ++ return }
+	if s.text[ s.pos ] == `\r` { s.pos ++ return }
+}
+
 
 // TODO remove once multiple return values are implemented
 struct ScanRes {
@@ -600,83 +648,56 @@ fn (s mut Scanner) scan() ScanRes {
 	return scan_res(.eof, '')
 }
 
-fn (s &Scanner) find_current_line_start_position() int {
-	if s.pos >= s.text.len { return s.pos }
-	mut linestart := s.pos
-	for {
-		if linestart <= 0  {
-			linestart = 1
-			break
-		}
-		if s.text[linestart] == 10 || s.text[linestart] == 13 {
-			linestart++
-			break
-		}
-		linestart--
-	}
-	return linestart
-}
-
-fn (s &Scanner) find_current_line_end_position() int {
-	if s.pos >= s.text.len { return s.pos }
-	mut lineend := s.pos
-	for {
-		if lineend >= s.text.len {
-			lineend = s.text.len
-			break
-		}
-		if s.text[lineend] == 10 || s.text[lineend] == 13 {
-			break
-		}
-		lineend++
-	}
-	return lineend
-}
-
 fn (s &Scanner) current_column() int {
-	return s.pos - s.find_current_line_start_position()
+	return s.pos - s.last_nl_pos
 }
 
+fn imax(a,b int) int { 	return if a > b { a } else { b } }
+fn imin(a,b int) int { 	return if a < b { a } else { b } }
 fn (s &Scanner) error(msg string) {
 	s.error_with_col(msg, 0)
 }
 
 fn (s &Scanner) error_with_col(msg string, col int) {
-	column := col-1
-	linestart := s.find_current_line_start_position()
-	lineend := s.find_current_line_end_position()
-  
-	fullpath := os.realpath( s.file_path )	
+	fullpath := os.realpath( s.file_path )
+	color_on := s.should_print_errors_in_color && term.can_show_color()
+	final_message := if color_on { term.red( term.bold( msg ) ) } else { msg }
 	// The filepath:line:col: format is the default C compiler
 	// error output format. It allows editors and IDE's like
 	// emacs to quickly find the errors in the output
 	// and jump to their source with a keyboard shortcut.
 	// Using only the filename leads to inability of IDE/editors
 	// to find the source file, when it is in another folder.
-	//println('${s.file_path}:${s.line_nr + 1}:${column+1}: $msg')
-	println('${fullpath}:${s.line_nr + 1}:${column+1}: $msg')
-
-	if s.should_print_line_on_error && lineend > linestart {
-		line := s.text.substr( linestart, lineend )
-		// The pointerline should have the same spaces/tabs as the offending
-		// line, so that it prints the ^ character exactly on the *same spot*
-		// where it is needed. That is the reason we can not just
-		// use strings.repeat(` `, column) to form it.
-		pointerline := line.clone()
-		mut pl := pointerline.str
-		for i,c in line {
-			pl[i] = ` `
-			if i == column { pl[i] = `^` }
-			else if c.is_space() { pl[i] = c  }
+	eprintln('${fullpath}:${s.line_nr + 1}:${col}: $final_message')
+	
+	if s.should_print_line_on_error && s.file_lines.len > 0 {
+		context_start_line := imax(0,                (s.line_nr - error_context_before + 1 ))
+		context_end_line   := imin(s.file_lines.len, (s.line_nr + error_context_after + 1 ))
+		for cline := context_start_line; cline < context_end_line; cline++ {
+			line := '${(cline+1):5d}| ' + s.file_lines[ cline ]
+			coloredline := if cline == s.line_nr && color_on { term.red(line) } else { line }
+			println( coloredline )
+			if cline != s.line_nr { continue }
+			// The pointerline should have the same spaces/tabs as the offending
+			// line, so that it prints the ^ character exactly on the *same spot*
+			// where it is needed. That is the reason we can not just
+			// use strings.repeat(` `, col) to form it.
+			mut pointerline := []string		
+			for i , c in line {
+				if i < col {
+					x := if c.is_space() { c } else { ` ` }
+					pointerline << x.str()
+					continue
+				}
+				pointerline << if color_on { term.bold( term.blue('^') ) } else { '^' }
+				break
+			}
+			println( '      ' + pointerline.join('') )
 		}
-		println(line)
-		println(pointerline)
 	}
-
 	exit(1)
 }
 
-
 fn (s Scanner) count_symbol_before(p int, sym byte) int {
   mut count := 0
   for i:=p; i>=0; i-- {
diff --git a/compiler/table.v b/compiler/table.v
index 4bf4b4ca82..a9a0cabdaf 100644
--- a/compiler/table.v
+++ b/compiler/table.v
@@ -96,8 +96,8 @@ mut:
 	scope_level     int
 	is_c            bool // todo remove once `typ` is `Type`, not string
 	is_moved        bool
-	scanner_pos     ScannerPos // TODO: use only scanner_pos, remove line_nr
 	line_nr         int
+	token           Tok // TODO: use only var.token.line_nr, remove var.line_nr
 }
 
 struct Type {
diff --git a/vlib/term/can_show_color_nix.v b/vlib/term/can_show_color_nix.v
new file mode 100644
index 0000000000..f9f7a50ec8
--- /dev/null
+++ b/vlib/term/can_show_color_nix.v
@@ -0,0 +1,11 @@
+module term
+
+import os
+
+fn C.isatty(int) int
+
+pub fn can_show_color() bool {
+	if os.getenv('TERM') == 'dumb' { return false }
+	if C.isatty(1) != 0 { return true }
+	return false
+}
diff --git a/vlib/term/can_show_color_win.v b/vlib/term/can_show_color_win.v
new file mode 100644
index 0000000000..b30730552e
--- /dev/null
+++ b/vlib/term/can_show_color_win.v
@@ -0,0 +1,10 @@
+module term
+
+import os
+
+// TODO: implement proper checking on windows too.
+// For now, just return false by default
+pub fn can_show_color() bool {
+	if os.getenv('TERM') == 'dumb' { return false }
+	return false
+}