UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark One)


  x

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

             For the quarterly period ended    June 30, 1998

                                       OR



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

For the transition period from                         to



               Commission file number          0-19244


                          Krupp Government Income Trust

         Massachusetts                                          04-3089272
State or other jurisdiction of                             (IRS employer
incorporation or organization)                             identification no.)

470 Atlantic Avenue, Boston, Massachusetts                              02210
(Address of principal executive offices)                             (Zip Code)


                                   (617) 423-2233
             (Registrant's telephone number, including area code)


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


                                             -5-

                          Part I. FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934.  Actual  results could differ  materially  from those  projected in the
forward-looking  statements as a result of a number of factors,  including those
identified herein.

<TABLE>

                          KRUPP GOVERNMENT INCOME TRUST

                                 BALANCE SHEETS


<CAPTION>
                                     ASSETS
                                                                            June 30,            December 31,
                                                                             1998                   1997
Participating Insured Mortgage Investments
 ("PIMIs") (Note 2):
<S>                                                                    <C>                     <C>          
 Insured Mortgages                                                     $  91,452,008           $ 108,470,247
 Additional loans                                                         13,358,208              19,209,108
Participating Insured Mortgages ("PIMs")
 (Notes 2)                                                                47,928,772              48,112,523
Mortgage-Backed Securities and insured
 mortgage ("MBS") (Note 3)                                                24,869,720              27,085,341
                                                                       -------------           -------------
           Total mortgage investments                                    177,608,708             202,877,219

Cash and cash equivalents                                                 37,138,095               9,749,804
Interest receivable and other assets                                       1,176,870               1,294,240
Prepaid acquisition fees and expenses, net
 of accumulated amortization of $7,842,467
 and $6,658,224, respectively                                              4,423,983               5,608,226
Prepaid participation servicing fees, net of
 accumulated amortization of $2,293,547 and
 $1,839,070, respectively                                                  1,795,166               2,249,643
                                                                       -------------           -------------

           Total assets                                                $ 222,142,822           $ 221,779,132
                                                                       =============           =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Deferred income on Additional Loans
   (Notes 2 and 5)                                                     $   5,578,309           $   7,871,606
Other liabilities                                                             16,961                  25,414
                                                                       -------------           -------------

           Total liabilities                                               5,595,270               7,897,020

Shareholders' equity (Note 4):
   Common stock, no par value; 17,510,000
   Shares authorized; 15,053,135 Shares
   issued and outstanding                                                212,496,510             212,496,510
   Retained earnings                                                       2,729,725                    -
  Unrealized gain on MBS                                                   1,321,317               1,385,602
                                                                       -------------          --------------

           Total Shareholders= equity                                    216,547,552             213,882,112
                                                                       -------------          --------------

           Total liabilities and Shareholders'
             equity                                                    $ 222,142,822          $  221,779,132
                                                                       =============          ==============

</TABLE>


                     The accompanying notes are an integral
                        part of the financial statements.





<TABLE>
                          KRUPP GOVERNMENT INCOME TRUST

                              STATEMENTS OF INCOME


<CAPTION>
                                           For the Three Months                  For the Six Months
                                              Ended June 30,                    Ended June 30,

                                            1998              1997                1998        1997
                                         ----------        ----------          ----------  -------

Revenues:
   Interest income - PIMs
    and PIMIs:
<S>                                     <C>                <C>                <C>              <C>       
    Base interest                       $ 2,955,766        $2,940,268         $ 6,011,682      $6,219,189
    Additional Loan
     Interest                             2,754,049            15,625           2,862,316         648,745
     Participation income                 4,871,325              -              4,898,075       1,348,392
   Interest income - MBS                    498,604           574,190           1,018,248       1,100,421
   Other interest income                    257,217           320,120             385,637         590,514
                                        -----------        ----------          ----------      ----------

         Total revenues                  11,336,961         3,850,203          15,175,958       9,907,261
                                        -----------        ----------          ----------      ----------

Expenses:
   Asset management fee
    to an affiliate                         359,209           381,699             730,797         764,685
   Expense reimbursements
    to affiliates                           (27,525)           95,646              68,121         204,642
   Amortization of prepaid
    expenses and fees                     1,259,126           395,212           1,638,720         790,425
   General and
    administrative                          141,447           101,182             224,049         229,256
                                        -----------        ----------         -----------      ----------

         Total expenses                   1,732,257           973,739           2,661,687       1,989,008
                                        -----------        ----------         -----------      ----------

Net income                              $ 9,604,704        $2,876,464         $12,514,271      $7,918,253
                                        ===========        ==========         ===========      ==========

Earning per Share                       $       .64        $      .20        $       .83       $      .53
                                        ===========        ==========        ===========       ==========

Weighted average Shares
 outstanding                                 15,053,135                              15,053,135
                                            ===========                             ===========



</TABLE>

                         The accompanying   notes  are  an  integral
                            part of the financial statements.


<PAGE>

<TABLE>

                                           KRUPP GOVERNMENT INCOME TRUST

                                             STATEMENTS OF CASH FLOWS


<CAPTION>
                                                                                  For the Six Months
                                                                                    Ended June 30,

                                                                                   1998                 1997
                                                                               ------------         --------
Operating activities:
  <S>                                                                           <C>              <C>        
   Net income                                                                   $12,514,271      $ 7,918,253
   Adjustments to reconcile net income to
    net cash provided by operating activities:
      Amortization of net premium                                                      -                 980
      Amortization of prepaid fees and expenses                                   1,638,720          790,425
      Changes in assets and liabilities:
         Decrease in interest receivable and other
          assets                                                                    117,370          149,657
         Decrease in other liabilities                                               (8,453)         (14,841)
                                                                                  ----------        --------

               Net cash provided by operating activities                         14,261,908        8,844,474
                                                                                 ----------        ---------

Investing activities:
   PIM prepayment                                                                16,752,295        5,630,985
   Principal collections on PIMs                                                    449,695          431,352
   Collection of Additional Loan                                                  5,850,900        1,540,000
   Principal collections on MBS                                                   2,151,336        1,514,874
   Acquisition of insured mortgage                                                     -          (3,366,000)
   Decrease in deferred income on
      Additional Loans                                                           (2,293,297)         (79,090)
                                                                                 ----------        ----------

               Net cash provided by investing activities                         22,910,929         5,672,121
                                                                                 ----------        ----------

Financing activity:
   Dividends                                                                     (9,784,546)       (9,784,548)
                                                                                 ----------        ----------

Net increase in cash and cash equivalents                                        27,388,291         4,732,047

Cash and cash equivalents, beginning of period                                    9,749,804        19,053,931
                                                                                -----------        ----------

Cash and cash equivalents, end of period                                        $37,138,095       $23,785,978
                                                                                ===========       ===========

</TABLE>



                     The accompanying notes are an integral
                        part of the financial statements.


<PAGE>



                                            KRUPP GOVERNMENT INCOME TRUST

                                            NOTES TO FINANCIAL STATEMENTS


1.    Accounting Policies

      Certain  information  and  footnote   disclosures   normally  included  in
      financial  statements  prepared  in  accordance  with  generally  accepted
      accounting  principles  have been  condensed  or omitted in this report on
      Form 10-Q  pursuant to the Rules and  Regulations  of the  Securities  and
      Exchange  Commission.  However,  in  the  opinion  of  Berkshire  Mortgage
      Advisors  Limited  Partnership  (the  "Advisor"),  the  Advisor  to  Krupp
      Government Income Trust (the "Trust"),  the disclosures  contained in this
      report are adequate to make the information presented not misleading.  See
      Notes to Financial  Statements in the Trust's Form 10-K for the year ended
      December  31, 1997 for  additional  information  relevant  to  significant
      accounting policies followed by the Trust.

      In the opinion of the  Advisor of the Trust,  the  accompanying  unaudited
      financial  statements  reflect all adjustments  (consisting of only normal
      recurring  accruals)  necessary  to present  fairly the Trust's  financial
      position as of June 30, 1998,  its results of operations for the three and
      six months  ended June 30,  1998 and 1997,  and its cash flows for the six
      months ended June 30, 1998 and 1997.

      The results of operations for the three and six months ended June 30, 1998
      are not  necessarily  indicative  of the results which may be expected for
      the full year.  See  Management's  Discussion  and  Analysis of  Financial
      Condition and Results of Operations included in this report.

2.    PIMs and PIMIs

      At June  30,  1998,  the  Trust=s  PIMs  and  PIMIs  have a fair  value of
      approximately  $148,413,777  and  gross  unrealized  gains  and  losses of
      approximately $1,040,041 and $5,365,252  respectively.  The PIMs and PIMIs
      have maturities ranging from 2001 to 2034. At June 30, 1998, there was one
      insured mortgage loan held in the Trust's portfolio that was delinquent in
      its principal  and interest  payments.  The borrower on the  Lifestyles at
      Boot  Ranch  PIMI  defaulted  on its May 1,  1998  debt  service  payment.
      However, the Trust continues to receive its monthly principal and interest
      pass-thru  payments  because those payments are insured by GNMA. All other
      borrowers  were current in their debt service  obligations  on the insured
      mortgages held in the Trust's portfolio.

      During June of 1998, the Trust received a prepayment of the Park Highlands
      PIMI and Additional Loan with a remaining principal balance of $16,752,295
      and $3,000,000 respectively. In addition, the Trust received Participation
      income  as  follows:   (i)  a  Preferred   Return  of   $1,481,865,   (ii)
      Participating  Appreciation  interest of  $1,206,719,  (iii) a  Prepayment
      Premium of $479,476,  (iv)  Participating  Income interest of $211,316 and
      (v) Additional Loan interest payable through the date of sale of $57,945.

      Also during June, the Trust received a prepayment of the Coconut Palm Club
      Additional  Loan of $2,850,900.  The Trust received a preferred  return of
      $1,400,538 and Additional  Loan interest  payable through the date of sale
      of $89,091.  The Coconut Palm Club PIMI first mortgage of $15,851,211 was
      received by the Trust on July 15, 1998.

      Due to the  prepayments  of the  Park  Highlands  and  Coconut  Palm  Club
      Additional  Loans in June,  the  Trust  also  recognized  additional  loan
      interest  of  $1,290,000  and  $1,295,354  respectively,   that  had  been
      previously classified as deferred income on Additional Loans.

                                    Continued


<PAGE>


                          KRUPP GOVERNMENT INCOME TRUST

                                       NOTES TO FINANCIAL STATEMENTS, Continued


3.    MBS

      At June 30,  1998,  the Trust=s MBS  portfolio  has an  amortized  cost of
      approximately  $23,548,403  and unrealized  gains of  $1,321,317.  The MBS
      portfolio has maturities ranging from 2008 to 2029.

      In June  1997,  Statement  of  Financial  Accounting  Standards  No.  130,
      'Reporting  Comprehensive  Income'  (FASB  130),  was issued  establishing
      standards  for  reporting  and  displaying  comprehensive  income  and its
      components  effective  January 1, 1998.  FASB 130  requires  comprehensive
      income and its components, as recognized under accounting standards, to be
      displayed  in a  financial  statement  with the same  prominence  as other
      financial statements,  if material. FASB 130 had no material effect on the
      Trust's financial position or results of operations.

4.    Changes in Shareholders' Equity

      A summary of changes in shareholders' equity for six months ended June 30,
1998 is as follows:
<TABLE>
<CAPTION>
                                      Total
                                      Common        Retained          Unrealized          Shareholders'
                                      Stock         Earnings              Gain            Equity
<S>                 <C>               <C>           <C>              <C>                  <C>         
Balance at December 31, 1997          $212,496,510  $    -           $ 1,385,602          $213,882,112

Net income                                   -      12,514,271              -               12,514,271

Dividends                                    -      (9,784,546)             -               (9,784,546)

Decrease in unrealized
 gain on MBS                                 -            -              (64,285)              (64,285)
                                      ------------  -----------       -----------           -----------

Balance at June 30, 1998              $212,496,510 $ 2,729,725       $ 1,321,317          $216,547,552
                                      ============ ===========       ===========          ============
</TABLE>

5. Related Party Transactions

      During the three months ended June 30, 1998 and 1997 the Trust received $0
      and $22,710 of interest income on Additional  Loans from affiliates of the
      Advisor.  During  the six month  ended June 30,  1998 and 1997,  the Trust
      received  $86,609 and $100,194 of interest income on Additional Loans from
      affiliates of the Advisor. In addition,  for the six months ended June 30,
      1998 and 1997, the Trust received  $26,749 and $0 related to participation
      interest income from an affiliate of the Advisor.

6.  Subsequent Event
     
     On August 6, 1998, the Advisor of the Trust declared a special dividend 
     of $2.86 per share to be paid during the third quarter of 1998 from the
     prepayment proceeds of the Park Highlands and Coconut Palm Club PIMIs. 

<PAGE>


Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
 OF OPERATIONS

   Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations  contains  forward-looking   statements  including  those  concerning
Management=s  expectations regarding the future financial performance and future
events.   These   forward-looking   statements  involve   significant  risk  and
uncertainties,  including  those  described  herein.  Actual  results may differ
materially from those anticipated by such forward-looking statements.

   Liquidity and Capital Resources

   The most  significant  demand on the Trust's  liquidity is dividends  paid to
investors of approximately $4.9 million per quarter.  The Trust currently has an
annual dividend rate of $1.30 per share, paid in quarterly installments of $.325
per share.  Funds for  dividends  come from  interest  income  received on PIMs,
PIMIs,  MBS,  cash  and  cash  equivalents  net of  operating  expenses  and the
principal  collections received on PIMs, PIMIs and MBS. The portion of dividends
funded from principal collections reduces the capital resources of the Trust. As
the capital  resources of the Trust decrease,  the total cash flows to the Trust
will also  decrease  which may result in periodic  adjustments  to the dividends
paid to the investors.

    The  Trust's  investments  in PIMs  and  PIMIs,  in  addition  to  providing
guaranteed or insured monthly principal and interest  payments,  may provide the
Trust with additional income through  participation in the cash generated by the
operations  of the  underlying  properties  and a  portion  of the  appreciation
realized upon the sale or refinancing of the underlying properties.  The Trust's
participation interests and the interest payments on the Additional Loan portion
of the PIMIs are neither insured nor guaranteed and will depend primarily on the
successful  operation of the  underlying  properties.  Six of the Trust's  seven
PIMIs funded the  construction  of multi-family  housing,  which require time to
achieve stabilized operations following completion of construction. With this in
mind,  the Trust  required the borrowers to establish  reserves and escrows with
Additional  Loan proceeds to provide funds for the Additional Loan base interest
payments during the construction and lease-up periods.  As these reserves become
depleted,  full  payment  of the  Additional  Loan  base  interest  will  depend
primarily on whether the underlying property can generate  sufficient  operating
cash  flow.  For  1998,  Red Run has  sufficient  escrows  to make the  required
Additional  Loan base  interest  payments  if  operations  cannot  support  such
payments.  In addition,  the Trust received the scheduled  semi-annual  interest
payments on the Additional Loans related to Park Highlands and The Seasons. As a
result of the workouts negotiated on the Lifestlyes and Windward Lakes, interest
on the additional loans will only be paid if there is any surplus cash generated
from each of the  property's  operations.  Management is closely  monitoring the
operating performances of the remaining properties. Overall, the Trust's ability
to meet its objectives will depend primarily on the operating performance of the
properties underlying the PIMs and PIMIs.

    The  borrower  on the  Mountain  View PIMI has asked the Advisor to consider
some  type of debt  service  relief.  The Trust had  entered  into a  short-term
workout  agreement  that  had  waived  four (4) Base  Interest  payments  on the
Additional  Loan and had reduced the  interest  rate on the insured  mortgage by
1/2%for an  18-month  period,  which  ended in  December  1996.  The recent
strength of the Huntsville market and low interest rates have flooded the market
with both  single-family  homes and new  apartment  construction.  Consequently,
Mountain View's occupancy and rental rate  collections have fallen.  The Advisor
is currently  assessing the  feasibility of extending debt service relief to the
borrower until the market stabilizes.

    On June 3, 1998,  the Trust  received  a  prepayment  of the Park  Highlands
Apartments   Additional  Loan.  The  Trust  received  $3,000,000  to  repay  the
Additional Loan, $3,379,376  representing  participation interest and $57,945 of
additional  loan interest.  On June 19, 1998, the Trust received  $16,752,295 to
repay the outstanding first mortgage balance.

    On June 12, 1998,  the Trust  received a prepayment of the Coconut Palm Club
PIMI. The Trust  received  $2,850,900 to repay the  Additional  Loan  $1,400,538
representing  participation interest and $89,091 of additional loan interest. On
July 15, 1998, the Trust received  $15,851,211 to repay the outstanding first
mortgage balance.
     
     On August 6, 1998, the Advisor of the Trust declared a special dividend of 
$2.86 per share to be paid during the third quarter of 1998 from the prepayment
proceeds of the Park Highlands and Coconut Palm Club PIMIs.

    The  borrower  on the  Lifestyles  PIMI  defaulted  on its May 1,  1998 debt
service payment on the insured first mortgage loan. The Trust had entered into a
workout agreement that had changed the structure of the Additional Loan payments
and had reduced the interest rate on the insured  mortgage by 1% per annum for a
twenty-four  month  period  that  ended  in  December  1997.  Due to  continuing
competition  from newer  properties,  Lifestyles  has not been able to  generate
sufficient  operating  revenues to maintain  the  property and service the first
mortgage debt. The Advisor expects to structure a long-term  modification of the
first mortgage loan as well as the Additional Loan prior to year-end 1998.

   For the first five years of the PIMs and PIMIs the borrowers  are  prohibited
from repaying.  For the second five years, the borrowers can repay the loans and
pay the greater of a prepayment penalty or all participation  interest for PIMs,
or by paying  all  amounts  due under the  PIMIs  and  satisfying  the  required
preferred return.  The  participation  features and Additional Loans are neither
insured  nor  guaranteed,  and  if  repayment  of a PIM  or  PIMI  results  from
foreclosure on the underlying  property or an insurance  claim,  the Trust would
not receive any  participation  interest or any amounts due under the Additional
Loan.  The Trust has the  option  to call PIMs and PIMIs by  accelerating  their
maturity if the loans are not repaid by the tenth year after permanent  funding.
The Trust will  determine the merits of exercising  the call option for each PIM
or PIMI as economic  conditions  warrant.  Such factors as the  condition of the
asset, local market conditions, interest rates and available financing will have
an impact on this decision.

Assessment of Credit Risk

   The Trust's  investments  in MBS and mortgages  are  guaranteed or insured by
FannieMae,  the Federal Home Loan Mortgage Corporation ("FHLMC"), the Government
National Mortgage  Association  (AGNMA@) and the Department of Housing and Urban
Development ("HUD") and therefore the certainty of their cash flows and the risk
of material  loss of the amounts  invested  depends on the  creditworthiness  of
these entities.

   FannieMae  is  a  federally-chartered  private  corporation  that  guarantees
obligations  originated  under  its  programs.  FHLMC  is a  federally-chartered
corporation  that guarantees  obligations  originated  under its programs and is
wholly-owned  by the twelve Federal Home Loan Banks.  These  obligations are not
guaranteed  by the U.S.  Government  or the Federal  Home Loan Bank Board.  GNMA
guarantees  the full and timely  payment of principal and basic  interest on the
securities it issues,  which represents  interest in pooled mortgages insured by
HUD. Obligations insured by HUD, an agency of the U.S. Government, are backed by
the full faith and credit of the U.S.
Government.

   The Trust's  Additional  Loans have similar  risks as those  associated  with
higher risk debt  instruments,  including:  reliance  on the  owner's  operating
skills,  ability to  maintain  occupancy  levels,  control  operating  expenses,
maintain the property and obtain adequate insurance coverage; adverse changes in
general  economic   conditions,   adverse  local  conditions,   and  changes  in
governmental  regulations,  real  estate  zoning  laws,  or tax laws;  and other
circumstances over which the Trust may have little or no control.

Operations

   The following  discussion  relates to the  operations of the Trust during the
three and six months ended June 30, 1998 and 1997.

    The Trusts net income for the three months ended June 30, 1998  increased as
compared to the three  months ended June 30, 1997 by  approximately  $6,728,000.
This increase was due primarily to higher participation income of $4,871,000 and
additional loan interest  income of $2,738,000 and lower expense  reimbursements
of  $123,000  and asset  management  fees of  $22,000.  This was offset by lower
interest  income on MBS of $76,000,  other interest income of $63,000 and higher
amortization  expense of $864,000.  The  increases in  participation  income and
additional loan interest  income are primarily  related to the repayments of the
Park  Highlands  PIMI and the  Coconut  Palm  Club  Additional  Loan.  The Trust
received a combined $4,780,000 of participation interest, $147,000 of additional
loan interest and  recognized  $2,585,000  of interest that had been  previously
received and recorded as deferred  income on additional  loans.  The increase in
amortization  expense  is because  the  Trust,  fully  amortized  the  remaining
balances of prepaid fees and expenses associated with the Park Highlands PIMI.

    Net income  increased for the six months ended June 30, 1998, as compared to
the same  period in 1997 by  approximately  $4,596,000.  This  increase  was due
primarily to higher  participation  income of  $3,550,000  and  additional  loan
interest income of $2,214,000 and lower expense  reimbursements  of $137,000 and
asset  management  fees of  $34,000.  This was offset by lower base  interest of
$208,000,  other  interest  income of $205,000 and  interest  income on MBS of 
$82,000 and higher amortization  expense of $848,000.  Participation  income and
additional loan interest  recognized in 1998 is related to the above  repayments
as compared  to  $1,246,000  of  participation  income and  $540,000 of deferred
additional  loan interest in 1997 related to the  prepayment of the Timber Ridge
PIMI.  The decrease in base  interest is due to the borrower of the Timber Ridge
PIMI prepaying the first mortgage during the first quarter of 1997.

    Other  interest  income  also  decreased  due  to  the  Trust  having  lower
short-term  investment  balances  during the first half of 1998 when compared to
the  corresponding  period in 1997.  During the six months ended June 1997,  the
Trust invested,  on a short-term  basis the prepayment  proceeds from the Canyon
Ridge  and  Timber  Ridge  prepayments  while  the  Advisor  sought  alternative
investments in participating  mortgages.  When no suitable investment was found,
the Trust made a special  dividend of $13.8 million  during the third quarter of
1997. These decreases were slightly offset by lower expense  reimbursements  and
asset management fees as mentioned above. The Trust generally funds a portion of
its dividends  with  principal  collections  which,  will continue to reduce the
assets of the Trust  thereby  reducing the income  generated by the Trust in the
future.


<PAGE>




                          KRUPP GOVERNMENT INCOME TRUST

                           PART II - OTHER INFORMATION


Item 1.       Legal Proceedings
              Response:  None

Item 2.       Changes in Securities
              Response:  None

Item 3.       Defaults upon Senior Securities
              Response:  None

Item 4.       Submission of Matters to a Vote of Security Holders
              Response:  None

Item 5.       Other Information
              Response:  None

Item 6.       Exhibits and Reports on Form 8-K
              Response:  None


<PAGE>


                                    SIGNATURE



Pursuant  to the  requirements  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.



                                   Krupp Government Income Trust
                                          (Registrant)



                                   BY:   /s/ Robert A. Barrows

                                         Robert A. Barrows
                                         Treasurer and Chief Accounting Officer
                                         of Krupp Government Income Trust














DATE:   July 31, 1998