FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended MARCH 31, 1998

                                       OR

o 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: 0-21494


                      WNC HOUSING TAX CREDIT FUND III, L.P.

State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization                                Identification No.)

California                                                   33-0463432

WNC HOUSING TAX CREDIT FUND III, L.P.
3158 Redhill Avenue, Suite 120, Costa Mesa, CA  92626
(714) 622-5565


         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 ____ No X




<PAGE>


Part I.  Financial Information

Item 1.  Financial Statements

         INDEX


                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                               INDEX TO FORM 10-Q

                      FOR THE QUARTER ENDED March 31, 1998




PART I. FINANCIAL INFORMATION

     Item 1. Financial Statements

         Balance Sheets, March 31, 1998 and December 31, 1997.................3

         Statement of Operations
              For the nine and three months ended March 31, 1998 and 1997.....4

         Statement of Partners' Equity
              For the three months ended March 31, 1998 and 1997 .............5

         Statement of Cash Flows
              For the three months ended March 31, 1998 and 1997..............6

         Notes to Financial Statements........................................7


     Item 2. Management's Discussion and Analysis of Financial
         Condition and Results of Operations.................................10


PART II. OTHER INFORMATION

     Item 6. Exhibits and Reports on Form 8-K................................13

     Signatures..............................................................14



<PAGE>


FINANCIAL STATEMENTS

                                    WNC HOUSING TAX CREDIT FUND III, L.P.
                                     (A California Limited Partnership)

                                               BALANCE SHEETS
                                    March 31, 1998 and December 31, 1997

                                                  1998                   1997
                                                  ----                   ----

                                                 ASSETS

Cash and cash equivalents                   $     344,474           $   333,368

 Investment in limited
  partnerships - Note 2                         5,607,369             5,923,350
 Other assets                                         259                     -
                                                ---------            ----------
                                            $   5,952,102        $    6,256,718
                                               ==========             =========


                                    LIABILITIES AND PARTNERS' EQUITY

Liabilities:
 Payable to limited partnerships -Note 4    $      50,818        $       50,818
 Accrued fees and expenses due to
   general partner and affiliates - Note 3        997,600               923,399
                                                 --------               -------
                                                1,048,418               974,217
                                               ----------               -------
Partners' equity (deficit):
 General partner                                    8,516                12,304
 Limited partners (15,000 units
 issued and outstanding)                        4,895,168             5,270,197
                                               ----------             ---------

Total partners' equity                          4,903,684             5,282,501
                                               ----------             ---------

                                             $  5,952,102         $   6,256,718
                                               ==========             =========


                                    UNAUDITED
                 See Accompanying Notes to Financial Statements

                                        3


<PAGE>



                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                             STATEMENT OF OPERATIONS
               For the Three Months Ended March 31, 1998 and 1997

                                                      1998                1997
                                                      ----                ----

        Interest income                         $      2,176        $     3,249
                                                       -----              -----



        Operating expenses:
        Amortization                                  11,812             11,812
        Asset management fees (Note 3)                74,868             74,868
        Legal and accounting                               -              2,000
        Other                                          1,713              1,087
                                                      ------              -----

        Total operating expenses                      88,393             89,767
                                                     -------             ------

        Loss from operations                         (86,217)           (86,518)
                                                    

        Equity in loss from
         limited partnerships                       (292,600)          (347,500)
                                                  -----------          ---------

        Net loss                               $    (378,817)        $ (434,018)
                                                  ===========          =========

        Net loss allocated to:
          General partner                             (3,788)            (4,340)
                                                      ======             ======

          Limited partners                          (375,029)          (429,678)
                                                     =======            ========
        Net loss per limited
         partner units (15,000 units
         issued and outstanding)                $       (25)           $    (29)
                                                 ==========             ========
                                                          

                                    UNAUDITED
                 See Accompanying Notes to Financial Statements

                                        4



<PAGE>



                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)
                          STATEMENT OF PARTNERS' EQUITY

               For the Three Months Ended March 31, 1998 and 1997


For the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>

                                                General          Limited
                                                Partner          Partner                  Total
                                                -------          -------                  -----
<S>                                          <C>               <C>                <C>    

Equity, December 31, 1997                     $     12,304     $   5,270,197      $    5,282,501

Net loss for the three months ended
 March 31, 1998                                     (3,788)         (375,029)           (378,817)
                                                    ------          ---------           ---------

Equity, March 31, 1998                        $      8,516      $  4,895,168      $    4,903,684
                                                     =====         =========           =========

<CAPTION>
For the Three Months Ended March 31, 1998

 
                                                    General          Limited
                                                    Partner          Partner               Total
                                                    -------          -------               -----
<S>                                             <C>              <C>              <C>

Equity, December 31, 1997                       $   28,170       $ 6,841,000      $    6,869,170
                                                          

Net loss for the three months ended
 March 31, 1997                                     (4,340)         (429,678)           (434,018)
                                                   -------         -----------         ----------
Equity, March 31, 1997                          $   23,830       $ 6,411,322      $     6,435,152
                                                   =======         =========            =========
                                                        
</TABLE>




                                    UNAUDITED
                 See Accompanying Notes to Financial Statements

                                        5


<PAGE>



                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                         STATEMENT OF CASH FLOWS 
               For the Three Months Ended March 31, 1998 and 1997

                                                       1998                1997
                                                       ----                ----
Cash flows used by operating activities:

  Net loss                                          $  (378,817)    $  (434,018)
    Adjustments to reconcile net loss to net
        cash used in operating activities:
        Equity in loss of limited partnerships          292,600         347,500
        Amortization                                     11,812          11,812
        Accrued asset management fee                     74,868          74,868
        Change in other assets                             (259)            531
        Accrued  expense due to
        general partner and affiliates                     (667)            848
                                                          ------            ---

           Net cash provided by (used in) 
            operating activities                           (463)          1,541
                                                           ----           -----

Cash flows used by investing activities:
     Distribution from limited partnerships              11,569           9,802
                                                         ------           -----
Cash flows used by investing activities:                 11,569           9,802
                                                         ------           -----

Net decrease in cash and cash equivalents                11,106          11,343

Cash and cash equivalents, beginning of period          333,368         448,311
                                                        -------         -------

Cash and cash equivalent, end of period              $  344,474    $    459,654
                                                        =======         =======




                                    UNAUDITED
                 See Accompanying Notes to Financial Statements

                                        6



<PAGE>



                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

General
-------

The information  contained in the following notes to the financial statements is
condensed  from that  which  would  appear in the annual  financial  statements;
accordingly,  the  financial  statements  included  herein should be reviewed in
conjunction with the financial statements and related notes thereto contained in
the Partnership's Annual Report for the year ended December 31, 1997. Accounting
measurements at interim dates  inherently  involve greater reliance on estimates
than at year end. The results of operations for the interim period presented are
not necessarily indicative of the results for the entire year.

In the opinion of the General  Partner,  the  accompanying  unaudited  financial
statements  contain  all  adjustments   (consisting  of  only  normal  recurring
accruals)  necessary to present  fairly the  financial  position as of March 31,
1998 and the  results  of  operations  and  changes  in cash flows for the three
months then ended.

Organization
------------

WNC Housing Tax Credit Fund III, L.P. (the  "Partnership")  was formed under the
California  Revised  Limited  Partnership  Act on May 10,  1991,  and  commenced
operations on September 30, 1992. The Partnership was formed to invest primarily
in other limited  partnerships which will own and operate  multi-family  housing
complexes that will qualify for low income housing credits.

The general partner is WNC Tax Credit Partners,  L.P. (the "General Partner"), a
California limited  partnership.  WNC & Associates,  Inc. and Wilfred N. Cooper,
Sr. are the general partners of the General Partner.  The Cooper Revocable Trust
owns 67% of the outstanding stock of WNC & Associates,  Inc. John B. Lester, Jr.
is the original limited partner of the Partnership and owns,  through the Lester
Family Trust, 29% of the outstanding stock of WNC & Associates, Inc.

The General Partner has a 1% interest in operating  profits and losses,  taxable
income and loss and in cash available for distribution from the Partnership. The
limited  partners  will  be  allocated  the  remaining  99% of  these  items  in
proportion  to their  respective  investments.  After the limited  partners have
received sale or refinancing  proceeds equal to their capital  contributions and
their  preferred  return (as defined in the  Partnership's  Agreement of Limited
Partnership) and the general partner has received a subordinated disposition fee
any  additional  sale or  refinancing  proceeds will be  distributed  90% to the
limited partners (in proportion to their respective  investments) and 10% to the
General Partner.

The  Partnership  considers  all bank  certificates  of deposit with an original
maturity of three months or less to be cash equivalents.

                                        7

<PAGE>


                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS
-------------------------------------------

At March 31, 1998, the Partnership had acquired limited partnership interests in
forty-eight   limited   partnerships  which  own  and  operate  fifty  apartment
complexes. All of these have completed construction as of March 31, 1998.

The Partnership,  as a limited partner, is a 99% owner and is entitled to 99% of
the operating profits and losses of the limited  partnerships.  Equity in losses
of limited  partnerships  is recognized in the  financial  statements  until the
related investment  account is reduced to a zero balance.  Losses incurred after
the  investment  account is reduced to zero are not  recognized.  If the limited
partnerships  report net income in future  years,  the  Partnership  will resume
applying  the equity  method only after its share of such net income  equals the
share of net losses not  recognized  during the  period(s) the equity method was
suspended.  At March  31,  1998,  seven of the  limited  partnership  investment
accounts have reached a zero balance and losses for those  partnerships  are not
recognized.

Following is a summary of the  components  of the  Partnership's  investment  in
limited  partnerships  as of March 31, 1998 and  December  31,  1997: 

                                         1998                1997
                                         ----                ----
Investment  balance,  
  beginning of period               $ 5,923,350              $ 7,221,643 
Equity in loss
  of limited partnership               (292,600)              (1,230,014) 
Distributions                           (11,569)                 (21,031)
Amortization  of  capitalized  
  acquisition  costs                    (11,812)                 (47,248) 
                                        -------                  -------  
Investment balance,
 end of period                      $ 5,607,369               $ 5,923,350
                                    ===========               ===========

Selected  operating  information from the combined  financial  statements of the
limited  partnerships  for the three months ended March 31, 1998 and 1997 are as
follows:
                                                1998                  1997
                                                ----                  ----
     Total revenue                       $    1,604,100   $         1,567,500
                                              ---------             ---------

     Interest expense                           463,500               475,800
     Depreciation                               492,900               493,400
     Operating expenses                         993,800               949,400
                                                -------               -------
     Total expenses                           1,950,200             1,918,600
     --------------                           ---------             ---------
     Net loss                            $     (346,100)   $        ($351,100)
                                              =========             ========= 
     
     Net loss allocable to the
       Partnership                       $    (292,600)    $        ($347,500)
                                              ========              ========= 

                                        8

<PAGE>



                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------

Under the terms of its  Agreement of Limited  Partnership,  the  Partnership  is
obligated to the General Partner or its affiliates for an annual  management fee
equal  to .5% of the  invested  assets  (defined  as the  Partnership's  capital
contributions plus its allocable  percentage of the permanent  financing) of the
limited  partnerships.  Fees of $74,868 were incurred for the three months ended
March 31, 1998 and 1997.

Accrued fees and advances due to  affiliates of General  Partner  consist of the
following at March 31, 1998 and December 31, 1997:

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

  Advances made for expenses                $             -     $         668
  Asset management fees                            997,,600           922,731
                                                   --------           -------
                                            $       997,600     $     923,399
                                                   =======            =======


NOTE 4 - CAPITAL CONTRIBUTIONS PAYABLE
--------------------------------------

Capital  contributions  payable represent amounts which are due at various times
based on conditions specified in the respective limited partnership  agreements.
These  contributions  are payable in  installments,  are  generally due upon the
limited  partnership  achieving certain  operating  benchmarks and are generally
expected to be paid within two years of the Partnership's initial investment.


NOTE 5 - INCOME TAXES
---------------------

No provision for income taxes has been made as the liability for income taxes is
an obligation of the partners of the Partnership.







                                        9

<PAGE>



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

Liquidity and Capital Resources
-------------------------------

The Partnership raised funds from investors through its public offering of units
of limited  partnership  interest  ("Units")  and  intends to apply such  funds,
including the installment  payments of the limited partners' promissory notes as
received,  to the acquisition of investments in partnerships,  acquisition fees,
the establishment of reserves, the payment of operating expenses and the payment
of expenses of this offering.

As of March 31, 1998,  the  Partnership  has received  subscriptions  for 15,000
units  consisting of cash of $15,000,000.  The  Partnership's  primary source of
capital has been the proceeds from its offering.

Overall,  as reflected in its Statement of Cash Flows, the Partnership had a net
increase in cash and cash  equivalents  of  approximately  $11,100 for the three
months  ended March 31,  1998.  This  increase in cash was  attributable  to the
Partnership's  operating and investing  activities,  primarily the distributions
from limited  partnerships.  No cash was provided by financing activities during
the three  months ended March 31, 1998.  All funds due from  investors  had been
received as of March 31, 1998.  Cash  provided by and used by the  Partnership's
operating  activities was minimal compared to the Partnership's other activities
and consisted  primarily of interest  received on cash deposits and payments for
operating fees and expenses.  The major  components of all these  activities are
discussed in greater detail below.

As of March 31, 1998, the  Partnership had made capital  contributions  to local
limited partnerships in the amount of approximately $10,858,000.

The Partnership's investments will not be readily marketable and may be affected
by adverse  general  economic  conditions  which, in turn,  could  substantially
increase the risk of operating  losses for the  apartment  complexes,  the local
limited  partnerships  and the  Partnership.  These  problems  may result from a
number of factors,  many of which cannot be controlled  by the General  Partner.
Nevertheless,  the General Partner anticipates that capital raised from the sale
of the Units will be  sufficient  to fund the  Partnership's  future  investment
commitments and proposed operations.

The Partnership initially established working capital reserves of at least 3% of
capital  contributions,  an amount  which is  anticipated  to be  sufficient  to
satisfy general working capital and administrative  expense  requirements of the
Partnership  including  payment of the asset  management fee as well as expenses
attendant to the preparation of tax returns and reports to the limited  partners
and other investor  servicing  obligations of the Partnership.  Liquidity would,
however,  be adversely  affected by  unanticipated  or greater than  anticipated
operating costs. The Partnership's  liquidity could also be affected by defaults
or delays in  payment  of the  promissory  notes,  from  which a portion  of the
working  capital  reserves is expected to be funded.  To the extent that working
capital  reserves  are  insufficient  to satisfy  the cash  requirements  of the
Partnership,  it is anticipated  that  additional  funds would be sought through
bank loans or other institutional  financing. The General Partner may also apply
any cash  distributions  received from the local limited  partnerships  for such
purposes or to replenish or increase working capital reserves.

                                       10


<PAGE>



As part  of its  application  for  government  assistance,  each  local  limited
partnership  must  establish to the  satisfaction  of the agency  providing  the
government  assistance that the local limited  partnership  will have sufficient
funds to complete  construction or rehabilitation of its apartment complex. None
of the local limited  partnerships  has any material capital  commitments  other
than the completion of its apartment complex.

It is not  expected  that any of the  local  limited  partnerships  in which the
Partnership will invest will generate cash from operations sufficient to provide
distributions to the limited partners in any significant  amount. Such cash from
operations,  if any,  would  first  be used to meet  operating  expenses  of the
Partnership,  including the payment of the asset  management  fee to the General
Partner.

Under its  partnership  agreement the  Partnership  does not have the ability to
assess its partners for additional  capital  contributions to provide capital if
needed  by the  Partnership  or  local  limited  partnerships.  Accordingly,  if
circumstances arise that cause the local limited partnerships to require capital
in addition to that  contributed by the  Partnership and any equity of the local
general partners, the only sources from which such capital needs will be able to
be  satisfied  (other than the limited  reserves  available  at the  Partnership
level) will be (i) third-party debt financing  (which may not be available,  if,
as expected, the apartment complexes owned by the local limited partnerships are
already  substantially  leveraged),  (ii)  additional  equity  contributions  or
advances of the local general partners,  (iii) other equity sources (which could
adversely  affect the  Partnership's  interest in tax credits,  cash flow and/or
proceeds of sale or refinancing of the apartment complexes and result in adverse
tax  consequences to the limited  partners),  or (iv) the sale or disposition of
the apartment  complexes (which could have the same adverse effects as discussed
in (iii) above).  There can be no assurance  that funds from any of such sources
would be readily available in sufficient amounts to fund the capital requirement
of the local limited partnerships in question.  If such funds are not available,
the  local  limited  partnerships  would  risk  foreclosure  on their  apartment
complexes if they were unable to re-negotiate the terms of their first mortgages
and any other debt secured by the apartment  complexes to the extent the capital
requirements of the local limited partnerships relate to such debt.

Results of Operations
---------------------

As of March  31,  1998 the  Partnership  had  acquired  48  limited  partnership
interests. Each of the 50 apartment complexes owned by such limited partnerships
receives or is expected to receive  government  assistance  and each of them has
received a reservation for federal low income housing credits.

Consistent  with  the   Partnership's   investment   objectives,   each  limited
partnership is generating or is expected to generate  federal low income housing
credits for a period of approximately  ten years,  commencing with completion of
construction or rehabilitation of its apartment  complex(es),  and (as discussed
below) is  generating  or is  expected  to  generate  losses  until  sale of the
apartment complex(es).

As reflected on its  Statements of  Operations,  the  Partnership  has a loss of
approximately  $379,000 the three months  ended March 31, 1998.  The  components
items of revenue and expense are discussed below.

                                       11


<PAGE>



Revenue -  Partnership  revenues  consisted of interest  earned on cash deposits
held in financial  institutions (i) as reserves,  or (ii) pending  investment in
limited  partnerships.  Interest  revenue in future  years will be a function of
prevailing interest rates and the amount of cash balances.

Expenses - The most  significant  component  of  operating  expenses  is, and is
expected to be, the asset management fee (called "Partnership management fee" in
the  Statements of  Operations).  The asset  management  fee is equal to 0.5% of
invested assets in limited partnerships;  accordingly, the amount to be incurred
in the future is a function of the level of such invested assets (i.e.,  the sum
of the Partnership's  capital contributions to the limited partnerships plus the
Partnership's  share of the debts  related to the apartment  complexes  owned by
such limited  partnerships).  Amortization  expense consists of the amortization
over a period of 30 years of the selection fee and other  expenses  attributable
to the acquisition of limited partnership interests.

Office expenses consists of the Partnership's  administrative  expenses, such as
accounting and legal fees, bank charges and investor reporting expenses.

Equity in losses from limited  partnerships - The Partnership's equity in losses
from  limited  partnerships  is  equal to 99% of the  aggregate  net loss of the
limited  partnerships.  After rent-up,  the limited partnerships are expected to
generate  losses during each year of  operations;  this is so because,  although
rental income is expected to exceed cash operating  expenses,  depreciation  and
amortization  deductions  claimed by the limited  partnerships  are  expected to
exceed net rental income.

Item 3:  Quantitative and Qualitative Disclosures Above Market Risks

None.







                                                                  12

<PAGE>



Part II.  Other Information

Item 1.  Legal Proceedings

NONE

Item 6.  Exhibits and Reports on Form 8-K

1.  NONE


2. No reports on Form 8-K were filed during the quarter ended March 31, 1998.



















                                       13


<PAGE>


         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.

WNC HOUSING TAX CREDIT FUND III, L.P.

By    WNC Tax Credit Partners, L.P.,        General Partner

By    WNC & ASSOCIATES, INC.        General Partner



By:   /s/John B. Lester, Jr.
     ---------------------------------------------------
John B. Lester, Jr.        President

Date: May 14, 1998

By:  /s/Theodore M. Paul
     -----------------------------------------------------
Theodore M. Paul  Vice President-Finance

Date: May 14, 1998








                                                                  14