According to a view that has dominated the field for over a century, the brain programs muscle commands and uses a copy of these commands [efference copy (EC)] to adjust not only resulting motor action but also ongoing perception. This view was helpful in formulating several classical problems of action and perception: (1) the posture-movement problem of how movements away from a stable posture can be made without evoking resistance of posture-stabilizing mechanisms resulting from intrinsic muscle and reflex properties; (2) the problem of kinesthesia or why our sense of limb position is good despite ambiguous positional information delivered by proprioceptive and cutaneous signals; (3) the problem of visual space constancy or why the world is perceived as stable while its retinal image shifts following changes in gaze. On closer inspection, the EC theory actually does not solve these problems in a physiologically feasible way. Here solutions to these problems are proposed based on the advanced formulation of the equilibrium-point hypothesis that suggests that action and perception are accomplished in a common spatial frame of reference selected by the brain from a set of available frames. Experimental data suggest that the brain is also able to translate or/and rotate the selected frame of reference by modifying its major attributes-the origin, metrics and orientation-and thus substantially influence action and perception. Because of this ability, such frames are called physical to distinguish them from symbolic or mathematical frames that are used to describe system behavior without influencing this behavior. Experimental data also imply that once a frame of reference is chosen, its attributes are modified in a feedforward way, thus enabling the brain to act in an anticipatory and predictive manner. This approach is extended to sense of effort, kinesthetic illusions, phantom limb and phantom body phenomena. It also addresses the question of why retinal images of objects are sensed as objects located in the external, physical world, rather than in internal representations of the brain.