UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                             ----------------------


                                   FORM 10-QSB

__X__   QUARTERLY  REPORT UNDER  SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE
        ACT OF 1934

                  For the quarterly period ended March 31, 1998

                                       OR

 _____  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d)  OF THE SECURITIES
        EXCHANGE ACT OF 1934

            For the transition period from __________ to __________.



                         Commission File Number 0-12593
                                                -------


                         PHOENIX LEASING INCOME FUND VII
--------------------------------------------------------------------------------
                                   Registrant

           California                                    68-0001202
----------------------------------            ----------------------------------
      State of Jurisdiction                   I.R.S. Employer Identification No.


2401 Kerner Boulevard, San Rafael, California                     94901-5527
--------------------------------------------------------------------------------
    Address of Principal Executive Offices                         Zip Code

       Registrant's telephone number, including area code: (415) 485-4500
                                                           --------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                               Yes __X__ No _____

345,431 Units of Limited  Partnership  Interest were outstanding as of March 31,
1998.

Transitional small business disclosure format:

                               Yes _____ No __X__


                                  Page 1 of 12

<PAGE>



                          Part I. Financial Information
                          -----------------------------
                          Item 1. Financial Statements
                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                 (Amounts in Thousands Except for Unit Amounts)
                                   (Unaudited)
                                                         March 31,  December 31,
ASSETS                                                     1998         1997
                                                           ----         ----

Cash and cash equivalents                                 $1,158      $  333

Accounts receivable (net of allowance
   for losses on accounts receivable of $23
   and $37 at March 31, 1998 and December 31,
   1997, respectively)                                        25          33

Notes receivable (net of allowance for
   losses on notes receivable of $55 at
   March 31, 1998 and December 31, 1997)                     -           601

Equipment on operating leases and held for
   lease (net of accumulated depreciation
   of $660 and $715 at March 31, 1998
   and December 31, 1997, respectively)                      -           -

Property, cable systems and equipment
   (net of accumulated  depreciation of $514
   and $472 at March 31, 1998 and December
   31, 1997, respectively)                                   739         774

Cable subscriber lists and franchise rights
   (net of accumulated  amortization of
   $713 and $660 at March 31, 1998 and
   December 31, 1997, respectively)                          578         632

Investment in joint ventures                                 407         410

Other assets                                                 218         179
                                                          ------      ------

     Total Assets                                         $3,125      $2,962
                                                          ======      ======

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

   Accounts payable and accrued expenses                  $  390      $  352

   Liquidation fees payable to General Partner               953         953
                                                          ------      ------


     Total Liabilities                                     1,343       1,305
                                                          ------      ------

Partners' Capital

   General Partner                                           363         348

   Limited Partners, 480,000 units authorized,
     366,432 units issued and 345,431 and
     345,496 units outstanding at March 31,
     1998 and December 31, 1997, respectively              1,382       1,298

   Unrealized gains on available-for-sale securities          37          11
                                                          ------      ------

     Total Partners' Capital                               1,782       1,657
                                                          ------      ------

     Total Liabilities and Partners' Capital              $3,125      $2,962
                                                          ======      ======

        The accompanying notes are an integral part of these statements.


                                        2

<PAGE>



                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Amounts in Thousands Except for Per Unit Amounts)
                                   (Unaudited)

                                                           Three Months Ended
                                                                March 31,
                                                            1998        1997
                                                            ----        ----
INCOME

   Cable subscriber revenue                                 $ 150       $ 146
   Interest income, notes receivable                          151          18
   Rental income                                               41          73
   Equity in earnings from joint ventures, net                  5          32
   Other income                                                15          15
                                                            -----       -----

     Total Income                                             362         284
                                                            -----       -----

EXPENSES

   Depreciation and amortization                               96          72
   Cable system operations                                     72          79
   Management fees to General Partner                          54          13
   Lease related operating expenses                             -           1
   Reimbursed administrative costs to General Partner           1           -
   Provision for losses on receivables                          1           -
   General and administrative expenses                         59          61
                                                            -----       -----

     Total Expenses                                           283         226
                                                            -----       -----

Net income before income taxes                                 79          58
Income tax benefit                                             20           3
                                                            -----       -----

NET INCOME                                                  $  99       $  61
                                                            =====       =====


NET INCOME PER LIMITED PARTNERSHIP UNIT                     $ .24       $ .15
                                                            =====       =====

DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT                  $   -       $3.78
                                                            =====       =====

ALLOCATION OF NET INCOME:
   General Partner                                          $  15       $   9
   Limited Partners                                            84          52
                                                            -----       -----

                                                            $  99       $  61
                                                            =====       =====

        The accompanying notes are an integral part of these statements.


                                        3

<PAGE>



                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)
                                   (Unaudited)
                                                             Three Months Ended
                                                                  March 31,
                                                             1998          1997
                                                             ----          ----
Operating Activities:
   Net income                                              $    99      $    61

     Adjustments to reconcile net income to
       net cash provided by operating activities:
         Depreciation and amortization                          96           72
         Gain on sale of equipment                              (1)          (1)
         Equity in earnings from joint ventures, net            (5)         (32)
         Provision for losses on accounts receivable             1          -
         Decrease (increase) in accounts receivable              7          (27)
         Increase (decrease) in accounts payable
           and accrued expenses                                 38          (26)
         Increase in deferred income tax asset                 (20)          (3)
         Decrease (increase) in other assets                     6           (8)
                                                           -------      -------

Net cash provided by operating activities                      221           36
                                                           -------      -------

Investing Activities:
   Principal payments, notes receivable                        601          -
   Proceeds from sale of equipment                               1            1
   Distributions from joint ventures                             8          118
   Property, plant and equipment, cable systems                 (6)         (23)
                                                           -------      -------

Net cash provided by investing activities                      604           96
                                                           -------      -------

Financing Activities:
   Distributions to partners                                   -         (1,307)
                                                           -------      -------

Net cash used by financing activities                          -         (1,307)
                                                           -------      -------

Increase (decrease) in cash and cash equivalents               825       (1,175)

Cash and cash equivalents, beginning of period                 333        2,155
                                                           -------      -------

Cash and cash equivalents, end of period                   $ 1,158      $   980
                                                           =======      =======

        The accompanying notes are an integral part of these statements.


                                        4

<PAGE>



                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 1.       General.

         The accompanying  unaudited  condensed  financial  statements have been
prepared by the  Partnership in accordance  with generally  accepted  accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included. Although management believes that the disclosures are adequate to make
the information  presented not misleading,  it is suggested that these condensed
financial  statements be read in conjunction  with the financial  statements and
the notes included in the Partnership's  Financial Statement,  as filed with the
SEC in the latest annual report on Form 10-K.

         Phoenix  Cablevision  of Oregon,  Inc.  has  accepted and agreed to the
terms  stated on a Letter  of  Intent  dated  February  11,  1998 to sell all or
substantially  all of its assets,  with a net carrying  value of $1.5 million at
December  31,  1997  for  $2  million.  Cash,  accounts  receivable,  marketable
securities and similar  investments  will be excluded from the sale. This Letter
of Intent is subject to a definitive asset purchase agreement which is currently
being negotiated with the potential buyer.

Note 2.       Reclassification.

         Reclassification  - Certain  1997  amounts  have been  reclassified  to
conform to the 1998 presentation.

Note 3.       Income Taxes.

         Federal  and state  income tax  regulations  provide  that taxes on the
income  or loss of the  Partnership  are  reportable  by the  partners  in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.

         Phoenix  Cablevision of Oregon,  Inc. (the Subsidiary) is a corporation
subject to state and  federal tax  regulations.  The  Subsidiary  reports to the
taxing  authority on the accrual basis.  When income and expenses are recognized
in  different  periods  for  financial  reporting  purposes  than for income tax
purposes,  deferred taxes are provided for such differences  using the liability
method.

Note 4.       Notes Receivable.

         Impaired Notes Receivable. At March 31, 1998 the recorded investment in
notes that are  considered  to be impaired  was  $55,000,  for which the related
allowance  for losses is $55,000.  The average  recorded  investment in impaired
loans during the three  months  ended March 31, 1998 and 1997 was  approximately
$55,000 and $662,000, respectively.


                                        5

<PAGE>



         The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:

                                                     1998           1997
                                                     ----           ----
                                                    (Amounts In Thousands)
     Beginning balance                               $ 55           $359
          Provision for losses                          -              -
          Write downs                                   -              -
                                                     ----           ----
     Ending balance                                  $ 55           $359
                                                     ====           ====

Note 5.       Net Income (Loss) and Distributions per Limited Partnership Unit.

       Net income and distributions  per limited  partnership unit were based on
the limited  partner's share of net income and  distributions,  and the weighted
average number of units  outstanding of 345,431 and 345,974 for the three months
ended March 31, 1998 and 1997.  For  purposes of  allocating  income  (loss) and
distributions to each individual limited partner, the Partnership  allocates net
income (loss) and  distributions  based upon each respective  limited  partner's
ending capital account balance.  The use of this method accurately reflects each
limited  partner's  participation  in  the  partnership  including  reinvestment
through the Capital  Accumulation  Plan.  As a result,  the  calculation  of net
income (loss) and distributions  per limited  partnership unit is not indicative
of per unit income (loss) and  distributions  due to  reinvestments  through the
Capital Accumulation Plan.

Note 6.       Investment in Joint Ventures.

Equipment Joint Venture

         The aggregate  financial  information of the equipment joint venture is
presented below:

                                                March 31,         December 31,
                                                  1998                1997
                                                  ----                ----
                                                    (Amounts in Thousands)

              Assets                           $    983           $     988
              Liabilities                            49                  58
              Partners' Capital                     934                 930

                                                     Three Months Ended
                                                         March 31,
                                                  1998                1997
                                                  ----                ----
                                                    (Amounts in Thousands)

              Revenue                          $     30           $     486
              Expenses                               14                 209
              Net Income                             16                 277


                                        6

<PAGE>



Financing Joint Ventures

         The aggregate  financial  information of the financing joint venture is
presented below:

                                                March 31,         December 31,
                                                  1998                1997
                                                  ----                ----
                                                    (Amounts in Thousands)

              Assets                           $     35           $      39
              Liabilities                            10                  11
              Partners' Capital                      25                  28

                                                     Three Months Ended
                                                          March 31,
                                                  1998                1997
                                                  ----                ----
                                                    (Amounts in Thousands)

              Revenue                           $    19            $     14
              Expenses                                0                   3
              Net Income                             19                  11

Foreclosed Cable Systems Joint Venture

         The aggregate  financial  information of the financing joint venture is
presented below:

                                                March 31,         December 31,
                                                  1998                1997
                                                  ----                ----
                                                    (Amounts in Thousands)

              Assets                           $  1,785           $   1,809
              Liabilities                           340                 358
              Partners' Capital                   1,445               1,451

                                                     Three Months Ended
                                                          March 31,
                                                  1998                1997
                                                  ----                ----
                                                    (Amounts in Thousands)

              Revenue                           $   220            $    210
              Expenses                              226                 223
              Net Loss                               (6)                (13)


                                        7

<PAGE>



                 PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY

Item 2.       Management's Discussion  and Analysis of  Financial Condition  and
              Results of Operations.

Results of Operations

         Phoenix  Leasing  Income  Fund  VII and  Subsidiary  (the  Partnership)
reported net income of $99,000  during the three months ended March 31, 1998, as
compared to net income of $61,000 during the same period in the preceding year.

         Total  revenues  increased  by $78,000 for the three months ended March
31,  1998,  as compared to the previous  year.  This  increase is primarily  the
result of a $133,000 increase in interest income from notes receivable. This was
partially   offset  by  a  decrease  in  rental   income  with  respect  to  the
Partnership's leasing activities, which is the result of an overall reduction in
the size of the equipment portfolio due to ongoing sales. The aggregate original
cost of equipment  owned directly by the  Partnership is $1 million at March 31,
1998, as compared to $2.1 million at March 31, 1997.

         The increase in interest  income from notes  receivable of $133,000 for
the three months ended March 31, 1998,  compared to the same period in the prior
year, is due to the Partnership  receiving  settlement proceeds from a defaulted
notes receivable. The Partnership received proceeds of $752,000 as settlement on
a note with a net carrying value of $601,000.

         Total  expenses for the three months ended March 31, 1998  increased by
$57,000,  as  compared  to the same period in 1997.  The  increase is  primarily
attributable  to an  increase  in  management  fees to the  General  Partner  of
$41,000.  This  increase  in  management  fees is directly  attributable  to the
previously  mentioned  settlement  proceeds  received  from  a  defaulted  notes
receivable.  Depreciation and amortization  increased  $24,000,  compared to the
same  period  in  the  prior  year,  due to an  increase  in  the  cable  system
depreciation.

         Because Phoenix Leasing Income Fund VII is in its liquidation stage, it
is not expected that the Partnership  will acquire any additional  equipment for
its leasing  activities.  As a result,  revenues  from  leasing  activities  are
expected to continue to decline as the portfolio is liquidated.

Cable System

         The Partnership  acquired a cable system in satisfaction of a defaulted
note receivable held by the Partnership.  The Partnership  assumed  ownership of
this cable system on October 28, 1993. Both cable  subscriber  revenue and cable
system  operations  expenses  remained  relatively the same for the three months
ended March 31, 1998, as compared to the same period in 1997.

Joint Ventures

         The Partnership has made investments in various equipment and financing
joint ventures along with other affiliated  partnerships  managed by the General
Partner for the purpose of spreading the risk of investing in certain  equipment
leasing and  financing  transactions.  These joint  ventures  are not  currently
making  any  significant  additional  investments  in new  equipment  leasing or
financing  transactions.  As a  result,  the  earnings  and cash  flow from such
investments  are  anticipated  to  continue  to  decline as the  portfolios  are
re-leased at lower rental rates and eventually liquidated.


                                        8

<PAGE>



         Earnings  from  equipment  and financing  joint  ventures  decreased by
$27,000 for the three months ended March 31, 1998, as compared to same period in
the prior  year.  The  decrease  in earnings  of $28,000  from  equipment  joint
ventures for the three months ended March 31, 1998, is a result of one equipment
joint venture having sold its remaining  equipment and notes  receivable  during
the year ended December 31, 1997. The increase in earnings from financing  joint
ventures  of  $1,000  is due to the  increase  in  interest  income  from  notes
receivable.

Liquidity and Capital Resources

         The  Partnership's  primary  source of liquidity  comes from  equipment
leasing and financing  activities.  The Partnership has contractual  obligations
with lessees for fixed lease terms at fixed rental  amounts.  The  Partnership's
future  liquidity is dependent  upon its receiving  payment of such  contractual
obligations. As the initial lease terms expire, the Partnership will continue to
renew,  remarket or sell the  equipment.  The future  liquidity in excess of the
remaining contractual obligations will depend upon the General Partner's success
in re-leasing and selling the Partnership's equipment as it comes off lease. The
Partnership also owns a cable television system and has investments in equipment
leasing and foreclosed cable television system joint ventures.

         During the three months ended March 31, 1998,  the net cash provided by
leasing,  financing and cable  television  activities was $823,000,  compared to
$36,000  for the  same  period  in the  prior  year.  The net  increase  in cash
generated is due to the receipt of a note receivable settlement during the three
months ended March 31, 1998.

         Distributions  from joint  ventures is another source of cash generated
by the Partnership.  The Partnership received distributions from equipment joint
ventures  of $4,000 for the three  months  ended  March 31,  1998,  compared  to
$115,000  for the  same  period  in  1997.  Distributions  from  joint  ventures
decreased  $111,000 for the three  months  ended March 31, 1998  compared to the
same period in the prior year,  due to the closure of one joint  venture as well
as  another  joint  venture   experiencing  a  decline  in  cash  available  for
distributions  as a result of a reduction  in rental  income and sales  proceeds
received. Distributions from financing joint ventures were $4,000 and $3,000 for
the three months ended March 31, 1998 and 1997, respectively.

         As of March 31, 1998, the  Partnership  owned  equipment held for lease
with a  purchase  price of  $974,000  and a net book  value  of $0  compared  to
$959,000 and $0, respectively at March 31, 1997. The General Partner is actively
engaged,  on  behalf  of  the  Partnership,   in  remarketing  and  selling  the
Partnership's off-lease equipment portfolio.

         The Limited  Partners  received  distributions of $0 and $1,307,000 for
the three months ended March 31, 1998 and 1997,  respectively.  As a result, the
cumulative  cash  distributions  to the Limited  Partners  are  $84,744,000  and
$83,887,000 at March 31, 1998 and 1997,  respectively.  The General  Partner did
not receive distributions during the three months ended March 31, 1998 and 1997.
The  Partnership  will  not  be  making  any  further  distributions  until  its
termination at which time a final  distribution  of excess cash, if any, will be
distributed.

         As the Partnership's  asset portfolio  continues to decline as a result
of the on-going  liquidation  of assets,  it is expected that the cash generated
from  leasing  operations  will  also  decline.  The  Partnership  will be fully
liquidated by its termination date of December 31, 1998.


                                        9

<PAGE>



         Cash on hand  and  cash  generated  from  cable  television,  equipment
leasing and financing  operations  has been and is anticipated to continue to be
sufficient to meet the Consolidated Partnership's ongoing operational expenses.


                                       10

<PAGE>



                         PHOENIX LEASING INCOME FUND VII

                                 March 31, 1998

                           Part II. Other Information.


Item 1.     Legal Proceedings.  Inapplicable.

Item 2.     Changes in Securities.  Inapplicable

Item 3.     Defaults Upon Senior Securities.  Inapplicable

Item 4.     Submission of Matters to a Vote of Securities Holders.  Inapplicable

Item 5.     Other Information.  Inapplicable

Item 6.     Exhibits and Reports on 8-K:

            a)  Exhibits:

                (27)   Financial Data Schedule

            b)  Reports on 8-K:  None


                                       11

<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                           PHOENIX LEASING INCOME FUND VII
                                           -------------------------------
                                                   (Registrant)


    Date                       Title                             Signature
    ----                       -----                             ---------


May 13, 1998         Executive Vice President,             /S/ GARY W. MARTINEZ
---------------      Chief Operating Officer               --------------------
                     and a Director of                     (Gary W. Martinez)
                     Phoenix Leasing Incorporated  
                     General Partner               
                     


May 13, 1998         Chief Financial Officer,              /S/ HOWARD SOLOVEI
---------------      Treasurer and a Director of           --------------------
                     Phoenix Leasing Incorporated          (Howard Solovei)
                     General Partner               
                     


May 13, 1998         Senior Vice President,                /S/ BRYANT J. TONG
---------------      Financial Operations                  --------------------
                     (Principal Accounting Officer)        (Bryant J. Tong)
                     and a Director of              
                     Phoenix Leasing Incorporated   
                     General Partner                
                     


                                       12