The world file is an ASCII text file associated with an image and contains the following lines:
If the image lacks a world file, a world file can be created using a text editor. This is generally practical only when the image does not require any rotation or rectification to be properly georeferenced, meaning lines 2 and 3 should be zero. Line 4 is negative to convert from image row numbering (increasing from the top down) to map coordinates (increasing from the bottom up). For a rectified image, line 4 must be equal to line 1 and of opposite sign. The ArcInfo commands REGISTER and RECTIFY, as well as GRIDIMAGE and CONVERTIMAGE create a world file.
The world file must follow this naming convention. If the image file name has a three-character extension (image1.tif), the world file has the same name followed by an extension containing the first and last letters of the image's extension and ending with a 'w' (image1.tfw). If the extension has more or less than three characters, including no extension at all, then the world file name is formed by simply appending a 'w' to the image file name.
The world file is discussed in the ArcInfo Workstation Help documentation under Cartography > Image Integration > Registering an image to real-world coordinates > Georeferencing images.