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 September 30, 2008

                                       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: 0-21494

                      WNC HOUSING TAX CREDIT FUND III, L.P.

                 California                           33-0463432
      (State or other jurisdiction of              (I.R.S. Employer
      incorporation or organization)              Identification No.)

         17782 Sky Park Circle
               Irvine, CA                             92614-6404
  (Address of principal executive offices)            (Zip Code)

                                 (714) 662-5565
                               (Telephone number)

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]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]   Accelerated filer [ ]

Non-accelerated filer [X]   Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ]    No [X]

<PAGE>


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

                              INDEX TO FORM 10 - Q

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008


PART I. FINANCIAL INFORMATION

     Item 1.  Financial Statements

         Balance Sheets
              As of September 30, 2008 and March 31, 2008......................3

         Statements of Operations
              For the Three and Six Months Ended September 30, 2008 and 2007...4

         Statement of Partners' Deficit
              For the Six Months Ended September 30, 2008......................5

         Statements of Cash Flows
              For the Six Months Ended September 30, 2008 and 2007.............6

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

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations.............................16

     Item 3.  Quantitative and Qualitative Disclosures about Market Risks.....17

     Item 4T. Controls and Procedures.........................................18

PART II. OTHER INFORMATION

     Item 1.  Legal Proceedings...............................................19

     Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.....19

     Item 3.  Defaults Upon Senior Securities.................................19

     Item 4.  Submission of Matters to a Vote of Security Holders.............19

     Item 5.  Other Information...............................................19

     Item 6.  Exhibits .......................................................19

     Signatures ..............................................................20


                                       2
<PAGE>

<TABLE>
<S>     <C>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                                   (UNAUDITED)


                                                           SEPTEMBER 30,      MARCH 31,
                                                               2008             2008
                                                           -------------    -------------

ASSETS

Cash                                                       $      53,598    $     101,033
Investments in Local Limited Partnerships, net (Note 2)           12,521           25,029
                                                           -------------    -------------

            Total Assets                                   $      66,119    $     126,062
                                                           =============    =============


LIABILITIES AND PARTNERS' DEFICIT

Liabilities:
  Accrued fees and expenses due to
    General Partner and affiliates (Note 3)                $   3,900,357    $   3,772,893
                                                           -------------    -------------

Partners' Deficit:
  General Partner                                                (78,864)         (76,990)
  Limited Partners (15,000 Partnership Units authorized;
    15,000 Partnership Units issued and outstanding)          (3,755,374)      (3,569,841)
                                                           -------------    -------------

    Total Partners' Deficit                                   (3,834,238)      (3,646,831)
                                                           -------------    -------------

            Total Liabilities and Partners' Deficit        $      66,119    $     126,062
                                                           =============    =============

                 See accompanying notes to financial statements


                                       3
<PAGE>

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

                                    STATEMENTS OF OPERATIONS

                 FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
                                           (UNAUDITED)


                                                 2008                              2007
                                    ------------------------------    ------------------------------
                                    Three Months      Six Months      Three Months      Six Months
                                    -------------    -------------    -------------    -------------

Reporting fees                      $       3,950    $      14,288    $          --    $       3,293
Distribution income                         4,779            9,284            7,053           17,604
                                    -------------    -------------    -------------    -------------

Total operating income                      8,729           23,572            7,053           20,897
                                    -------------    -------------    -------------    -------------

Operating expenses:
   Amortization (Note 2)                       85              170               85              170
   Asset management fees (Note 3)          74,866          149,732           74,866          149,732
   Legal and accounting fees                   --               65           19,218           19,218
   Impairment expense                          --            4,789               --               --
   Write off of advances to Local
     Limited  Partnerships                 46,029           46,029               --               --
   Other                                      290            2,667              145            2,342
                                    -------------    -------------    -------------    -------------

      Total operating expenses            121,270          203,452           94,314          171,462
                                    -------------    -------------    -------------    -------------

Loss from operations                     (112,541)        (179,880)         (87,261)        (150,565)

Equity in losses of Local
  Limited Partnerships (Note 2)            (3,774)          (7,549)            (647)          (1,295)

Interest income                                 9               22               81              219
                                    -------------    -------------    -------------    -------------

Net loss                            $    (116,306)   $    (187,407)   $     (87,827)   $    (151,641)
                                    =============    =============    =============    =============

Net loss allocated to:
  General Partner                   $      (1,163)   $      (1,874)   $        (878)   $      (1,516)
                                    =============    =============    =============    =============

  Limited Partners                  $    (115,143)   $    (185,533)   $     (86,949)   $    (150,125)
                                    =============    =============    =============    =============

Net loss per Partnership Unit       $          (8)   $         (12)   $          (6)   $         (10)
                                    =============    =============    =============    =============

Outstanding weighted
  Partnership Units                        15,000           15,000           15,000           15,000
                                    =============    =============    =============    =============

                         See accompanying notes to financial statements


                                               4
<PAGE>

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

                                 STATEMENT OF PARTNERS' DEFICIT

                           FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
                                           (UNAUDITED)


                                             GENERAL         LIMITED
                                             PARTNER         PARTNERS           TOTAL
                                          -------------    -------------    -------------

Partners' deficit at March 31, 2008       $     (76,990)   $  (3,569,841)   $  (3,646,831)

Net loss                                         (1,874)        (185,533)        (187,407)
                                          -------------    -------------    -------------

Partners' deficit at September 30, 2008   $     (78,864)   $  (3,755,374)   $  (3,834,238)
                                          =============    =============    =============

                         See accompanying notes to financial statements


                                               5
<PAGE>

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

                                    STATEMENTS OF CASH FLOWS

                      FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
                                           (UNAUDITED)


                                                               2008             2007
                                                           -------------    -------------

Cash flows from operating activities:

  Net loss                                                 $    (187,407)   $    (151,641)
    Adjustments to reconcile net loss to net
       cash used in operating activities:
         Amortization                                                170              170
         Impairment expense                                        4,789               --
         Equity in losses of  Local Limited Partnerships           7,549            1,295
         Advances made to Local Limited Partnerships             (46,029)              --
         Write off of advances made to Local Limited
           Partnerships                                           46,029               --
         Change in accrued fees and expenses due to
          General Partner and affiliates                         127,464          146,868
                                                           -------------    -------------

              Net cash used in operating activities              (47,435)          (3,308)
                                                           -------------    -------------

Net decrease in cash                                             (47,435)          (3,308)

Cash, beginning of period                                        101,033          149,077
                                                           -------------    -------------


Cash, end of period                                        $      53,598    $     145,769
                                                           =============    =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

  Taxes paid                                               $          --    $          --
                                                           =============    =============

                         See accompanying notes to financial statements


                                               6
</TABLE>
<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


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

General
-------

The accompanying condensed unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act
of 1934. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six months ended
September 30, 2008 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 2009. For further information,
refer to the financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-K for the fiscal year ended March 31,
2008.

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

WNC Housing Tax Credit Fund III, L.P., (the "Partnership"), is a California
Limited Partnership formed under the laws of the State of California on May 10,
1991. The Partnership was formed to acquire limited partnership interests in
other limited partnerships ("Local Limited Partnerships") which own multi-family
housing complexes ("Housing Complexes") that are eligible for Federal low income
housing tax credits ("Low Income Housing Tax Credits"). The local general
partners (the "Local General Partners") of each Local Limited Partnership retain
responsibility for maintaining, operating and managing the Housing Complexes.
Each Local Limited Partnership is governed by its agreement of limited
partnership (the "Local Limited Partnership Agreement").

The general partner of the Partnership is WNC Tax Credit Partners, L.P. (the
"General Partner"). WNC & Associates, Inc., a California corporation
("Associates"), and Wilfred N. Cooper, Sr., are general partners of the General
Partner. The chairman and president of Associates owns all of the outstanding
stock of Associates. The business of the Partnership is conducted primarily
through Associates, as the Partnership has no employees of its own.

The Partnership shall continue in full force and effect until December 31, 2050
unless terminated prior to that date pursuant to the partnership agreement or
law.

The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.

The Partnership Agreement authorized the sale of up to 15,000 units of Limited
Partnership interests ("Partnership Units") at $1,000 per Partnership Unit. The
offering of Partnership Units concluded on September 30, 1993, at which time
15,000 Partnership Units representing subscriptions in the amount of
$15,000,000, had been accepted. The General Partners have a 1% interest in
operating profits and losses, taxable income and losses, cash available for
distribution from the Partnership and Low Income Housing Tax Credits of the
Partnership. The investors (the "Limited Partners") will be allocated the
remaining 99% of these items in proportion to their respective investments.

The proceeds from the disposition of any of the Local Limited Partnership's
Housing Complexes will be used first to pay debts and other obligations per the
respective Local Limited Partnership Agreement. Any remaining proceeds will then
be paid to the Partnership. The sale of a Housing Complex may be subject to
other restrictions and obligations. Accordingly, there can be no assurance that
a Local Limited Partnership will be able to sell its Housing Complex. Even if it
does so, there can be no assurance that any significant amounts of cash will be
distributed to the Partnership. Should such distributions occur, the Limited
Partners will be entitled to receive distributions equal to their capital
contributions and their return on investment (as defined in the Partnership
Agreement) and the General Partners would then be entitled to receive proceeds


                                       7

<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


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

equal to their capital contributions from the remainder. 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 Partners.

Risks and Uncertainties
-----------------------

An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The Low Income Housing Tax Credits rules are extremely complicated.
Noncompliance with these rules results in the loss of future Low Income Housing
Tax Credits and the fractional recapture of Low Income Housing Tax Credits
already taken. In most cases the annual amount of Low Income Housing Tax Credits
that an individual can use is limited to the tax liability due on the person's
last $25,000 of taxable income. The Local Limited Partnerships may be unable to
sell the Housing Complexes at a price which would result in the Partnership
realizing cash distributions or proceeds from the transaction. Accordingly, the
Partnership may be unable to distribute any cash to its Limited Partners. Low
Income Housing Tax Credits may be the only benefit from an investment in the
Partnership.

The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
future Low Income Housing Tax Credits, a fractional recapture of prior Low
Income Housing Tax Credits, and a loss of the Partnership's investment in the
Housing Complex would occur. The Partnership is a limited partner or a
non-managing member of each Local Limited Partnership. Accordingly, the
Partnership will have very limited rights with respect to management of the
Local Limited Partnerships. The Partnership will rely totally on the Local
General Partners. Neither the Partnership's investments in Local Limited
Partnerships, nor the Local Limited Partnerships' investments in Housing
Complexes, are readily marketable. To the extent the Housing Complexes receive
government financing or operating subsidies, they may be subject to one or more
of the following risks: difficulties in obtaining tenants for the Housing
Complexes; difficulties in obtaining rent increases; limitations on cash
distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of interests in Local Limited Partnerships; limitations
on removal of Local General Partners; limitations on subsidy programs; and
possible changes in applicable regulations. Uninsured casualties could result in
loss of property and Low Income Housing Tax Credits and recapture of Low Income
Housing Tax Credits previously taken. The value of real estate is subject to
risks from fluctuating economic conditions, including employment rates,
inflation, tax, environmental, land use and zoning policies, supply and demand
of similar Housing Complexes, and neighborhood conditions, among others.

The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low Income Housing Tax
Credits and tax losses allocable to Limited Partners could be reduced if the IRS
were successful in such a challenge. The alternative minimum tax could reduce
tax benefits from an investment in the Partnership. Changes in tax laws could
also impact the tax benefits from an investment in the Partnership and/or the
value of the Housing Complexes.

All of the Low Income Housing Tax Credits anticipated to be realized from the
Local Limited Partnerships have been realized. The Partnership does not
anticipate being allocated any Low Income Housing Tax Credits from the Local
Limited Partnerships in the future. Until the Local Limited Partnerships have
completed the 15 year Low Income Housing Tax Credit compliance period, risks
exist for potential recapture of prior Low Income Housing Tax Credits received.


                                       8
<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


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

No trading market for the Partnership Units exists or is expected to develop.
Limited Partners may be unable to sell their Partnership Units except at a
discount and should consider their Partnership Units to be a long-term
investment. Individual Limited Partners will have no recourse if they disagree
with actions authorized by a vote of the majority of Limited Partners.

The Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing advances sufficient
enough to fund the operations and working capital requirements of the
Partnership through August 31, 2010.

Anticipated future and existing cash resources of the Partnership are not
sufficient to pay existing liabilities of the Partnership. However,
substantially all of the existing liabilities of the Partnership are payable to
the General Partner and/or its affiliates. Though the amounts payable to the
General Partner and/or its affiliates are contractually currently payable, the
Partnership anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual obligations until capital reserves are
in excess of the aggregate of then existing contractual obligations and then
anticipated future foreseeable obligations of the Partnership. The Partnership
would be adversely affected should the General Partner and/or its affiliates
demand current payment of the existing contractual obligations and or suspend
services for this or any other reason.

Exit Strategy
-------------

The Compliance Period for a Housing Complex is generally 15 years following
construction or rehabilitation completion. Associates was one of the first in
the industry to offer syndicated investments in Low Income Housing Tax Credits.
The initial programs are completing their Compliance Periods.

With that in mind, the General Partner is continuing its review of the Housing
Complexes, with special emphasis on the more mature Housing Complexes such as
any that have satisfied the IRS compliance requirements. The review considers
many factors, including extended use requirements (such as those due to mortgage
restrictions or state compliance agreements), the condition of the Housing
Complexes, and the tax consequences to the Limited Partners from the sale of the
Housing Complexes.

Upon identifying those Housing Complexes with the highest potential for a
successful sale, refinancing or syndication, the Partnership expects to proceed
with efforts to liquidate them. The objective is to maximize the Limited
Partners' return wherever possible and, ultimately, to wind down the
Partnership. Local Limited Partnership interests may be disposed of any time by
the General Partner in its discretion. While liquidation of the Housing
Complexes continues to be evaluated, the dissolution of the Partnership was not
imminent as of September 30, 2008.

Subsequent to September 30, 2008, the Partnership sold its Limited Partnership
interest in Carlinville Associate I, L.P. ("Carlinville"). Carlinville was
appraised with a value of $514,000 and the outstanding mortgage debt was
$483,978. The Limited Partnership interest was sold in December 2008 to the
Local General Partner. The 15-year compliance period expired in 2008 therefore
there will be no recapture of Low Income Housing Tax Credits. The Partnership
received $30,022, for its Limited Partnership interests in this Local Limited
Partnership, which was the difference between the appraised value and the
outstanding debt of the property. The $30,022 is being kept in the Partnerships
reserves to pay the costs incurred related to both dispositions and other
operating expenses of the Partnership.


                                       9
<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


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

Method of Accounting for Investments in Local Limited Partnerships
------------------------------------------------------------------

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnerships' results of operations
and for any contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by the estimated value derived by
management, generally consisting of the sum of the remaining future Low Income
Housing Tax Credits estimated to be allocable to the Partnership and the
estimated residual value to the Partnership. If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any
such Local Limited Partnership. The accounting policies of the Local Limited
Partnerships, generally, are expected to be consistent with those of the
Partnership. Costs incurred by the Partnership in acquiring the investments are
capitalized as part of the investment account and are being amortized over 30
years (see Note 2).

"Equity in losses of Local Limited Partnerships" for the periods ended September
30, 2008 and 2007 have been recorded by the Partnership. Management's estimate
for the six-month period is based on either actual unaudited results reported by
the Local Limited Partnerships or historical trends in the operations of the
Local Limited Partnerships. In subsequent annual financial statements, upon
receiving the actual annual results reported by the Local Limited Partnerships,
management reverses its prior estimate and records the actual results reported
by the Local Limited Partnerships. Equity in losses of Local Limited
Partnerships allocated to the Partnership are not recognized to the extent that
the investment balance would be adjusted below zero. As soon as the investment
balance reaches zero, the related costs of acquiring the investment are impaired
(see Note 2). If the Local Limited Partnerships reported 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 (see Note 2).

The Partnership does not consolidate the accounts and activities of the Local
Limited Partnerships, which are considered Variable Interest Entities under
Financial Accounting Standards Board ("FASB") Interpretation No. 46-Revised,
"Consolidation of Variable Interest Entities", because the Partnership is not
considered the primary beneficiary. The Partnership's balance in investments in
Local Limited Partnerships, plus the risk of recapture of Low Income Housing Tax
Credits previously recognized on such investments, represents the maximum
exposure to loss in connection with such investments. The Partnership's exposure
to loss on the Local Limited Partnerships is mitigated by the condition and
financial performance of the underlying Housing Complexes as well as the
strength of the Local General Partners and their guarantees against Low Income
Housing Tax Credits recapture.

Distributions received by the Partnership are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income. As of September 30, 2008, all but one of the
investment balances had reached zero.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ from those
estimates.


                                       10
<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


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

Cash and Cash Equivalents
-------------------------

The Partnership considers all highly liquid investments with original maturities
of three months or less when purchased to be cash equivalents. As of September
30, 2008 and March 31, 2008, the Partnership had no cash equivalents.

Reporting Comprehensive Income
------------------------------

The STATEMENT OF FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO. 130, REPORTING
COMPREHENSIVE INCOME established standards for the reporting and display of
comprehensive income (loss) and its components in a full set of general-purpose
financial statements. The Partnership had no items of other comprehensive income
for all periods presented, as defined by SFAS No. 130.

Income Taxes
------------

No provision for income taxes has been recorded in the accompanying financial
statements as any liabilities and/or benefits for income taxes flow to the
partners of the Partnership and are their obligations and/or benefits. For
income tax purposes, the Partnership reports on a calendar year basis.

In June 2006, FASB issued Interpretation No. 48 "Accounting for Uncertainty in
Income Taxes" (FIN 48), an interpretation of FASB Statement No. 109. FIN 48
provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Partnership's tax returns to determine whether the tax positions
are more-likely-than-not of being sustained upon examination by the applicable
tax authority, based on the technical merits of the tax position, and then
recognizing the tax benefit that is more-likely-than-not to be realized. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax expense in the current reporting period. As required, the
Partnership adopted FIN 48 effective April 1, 2007 and concluded that the effect
is not material to its financial statements. Accordingly, no cumulative effect
adjustment related to the adoption of FIN 48 was recorded.

Net Loss Per Partnership Unit
-----------------------------

Net loss per Partnership Unit is calculated pursuant to STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS NO. 128, EARNINGS PER SHARE. Net loss per Partnership Unit
includes no dilution and is computed by dividing loss allocated to Limited
Partners by the weighted average number of Partnership Units outstanding during
the period. Calculation of diluted net loss per Partnership Unit is not
required.

Revenue Recognition
-------------------

The Partnership is entitled to receive reporting fees from the Local Limited
Partnerships. The intent of the reporting fees is to offset (in part)
administrative costs incurred by the Partnership in corresponding with the Local
Limited Partnerships. Due to the uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.

Amortization
------------

Acquisition fees and costs are being amortized over 30 years using the
straight-line method. Amortization expense for each of the six months ended
September 30, 2008 and 2007 was $170.


                                       11
<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


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

Impairment
----------

A loss in value from a Local Limited Partnership other than a temporary decline
is recorded as an impairment loss. Impairment is measured by comparing the
investment carrying amount to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership and the estimated residual
value of the investment.

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
--------------------------------------------------

As of the periods presented, the Partnership owns Local Limited Partnership
interests in 48 Local Limited Partnerships consisting of an aggregate of 1,686
apartment units. The Local General Partners of the Local Limited Partnerships
manage the day to day operations of the entities. Significant Local Limited
Partnership business decisions require approval from the Partnership. The
Partnership, as a Limited Partner, is generally entitled to 99%, as specified in
the Local Limited Partnership governing agreements, of the operating profits and
losses, taxable income and losses, and Low Income Housing Tax Credits of the
Local Limited Partnerships.

The following is a summary of the equity method activity of the investments in
Local Limited Partnerships for the periods presented below:

<TABLE>
<S>     <C>
                                                          FOR THE SIX
                                                          MONTHS ENDED       FOR THE
                                                         SEPTEMBER 30,      YEAR ENDED
                                                              2008        MARCH 31, 2008
                                                         -------------    -------------
Investments per balance sheet, beginning of period       $      25,029    $      20,384
Equity in income (losses) of Local Limited Partnerships         (7,549)           4,985
Impairment expense                                              (4,789)              --
Amortization of capitalized acquisition fees and costs            (170)            (340)
                                                         -------------    -------------

Investments per balance sheet, end of period             $      12,521    $      25,029
                                                         =============    =============

                                                          FOR THE SIX
                                                          MONTHS ENDED       FOR THE
                                                         SEPTEMBER 30,      YEAR ENDED
                                                              2008        MARCH 31, 2008
                                                         -------------    -------------
Investments in Local Limited Partnerships, net           $       7,547    $      19,885
Acquisition fees and costs, net of accumulated
  amortization of $1,412,448 and $1,412,278                      4,974            5,144
                                                         -------------    -------------
Investments per balance sheet, end of period             $      12,521    $      25,029
                                                         =============    =============
</TABLE>


                                       12
<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------

Selected financial information for the six months ended September 30, 2008 and
2007 from the unaudited combined condensed financial statements of the Local
Limited Partnerships in which the Partnership has invested is as follows:


                   COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                                   2008               2007
                                               -------------      -------------

Revenues                                       $   4,204,000      $   4,094,000
                                               -------------      -------------

Expenses
  Interest expense                                   660,000            846,000
  Depreciation and amortization                      957,000            934,000
  Operating expenses                               3,147,000          2,824,000
                                               -------------      -------------
      Total expenses                               4,764,000          4,604,000
                                               -------------      -------------

Net loss                                       $    (560,000)     $    (510,000)
                                               =============      =============
Net loss allocable to the Partnership          $    (551,000)     $    (504,000)
                                               =============      =============
Net loss recorded by the Partnership           $      (8,000)     $      (1,000)
                                               =============      =============

Certain Local Limited Partnerships have incurred significant operating losses
and/or have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership may be required to sustain operations of such
Local Limited Partnerships. If additional capital contributions are not made
when they are required, the Partnership's investments in certain of such Local
Limited Partnerships could be impaired, and the loss and recapture of the
related Low Income Housing Tax Credits could occur.


                                       13
<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


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

Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or its affiliates the following fees:

(a)  Acquisition fees of up to 9% of the gross proceeds from the sale of
     Partnership Units as compensation for services rendered in connection with
     the acquisition of Local Limited Partnerships. At the end of all periods
     presented, the Partnership incurred acquisition fees of $1,350,000.
     Accumulated amortization of these capitalized costs was $1,345,025 and
     $1,344,855 as of September 30, 2008 and March 31, 2008, respectively.

(b)  Reimbursement of costs incurred by the General Partner or an affiliate in
     connection with the acquisition of Local Limited Partnerships. These
     reimbursements have not exceeded 1.6% of the gross proceeds. As of the end
     of all periods presented, the Partnership incurred acquisition costs of
     $67,423, which have been included in investments in Local Limited
     Partnerships. Accumulated amortization was $67,423 as of September 30, 2008
     and March 31, 2008.

(c)  An annual asset management fee equal to 0.5% of the invested assets of the
     Partnership, as defined. "Invested Assets" means the sum of the
     Partnership's investment in Local Limited Partnership interests and the
     Partnership's Allocable share of mortgage loans on and other debts related
     to the Housing Complexes owned by such Local Limited Partnerships. Fees of
     $149,732 were incurred during each of the six months ended September 30,
     2008 and 2007. The Partnership paid the General Partner and or its
     affiliates $10,000 and $17,500 of those fees during the six months ended
     September 30, 2008 and 2007, respectively.

(d)  The Partnership reimburses the General Partner or its affiliates for
     operating expenses incurred by the Partnership and paid for by the General
     Partner or its affiliates on behalf of the Partnership. Operating expense
     reimbursements were $15,000 and $6,924 during the six months ended
     September 30, 2008 and 2007, respectively.

(e)  A subordinated disposition fee in an amount equal to 1% of the sales price
     of real estate sold. Payment of this fee is subordinated to the limited
     partners receiving a preferred return of 16% through December 31, 2002 and
     6% thereafter (as defined in the Partnership Agreement) and is payable only
     if the General Partner or its affiliates render services in the sales
     effort. No such fee was incurred in the three months ended September 30,
     2008.

The accrued fees and expenses due to the General Partner and affiliates consist
of the following at:

                                                     SEPTEMBER 30,   MARCH 31,
                                                         2008          2008
                                                     ------------   ------------
       Expenses paid by the General Partner or
         affiliates on behalf of the Partnership     $     17,801   $     30,069
       Accrued asset management fees                    3,882,556      3,742,824
                                                     ------------   ------------

       Total                                         $  3,900,357   $  3,772,893
                                                     ============   ============

The General Partner and/or its affiliates do not anticipate that these accrued
fees will be paid until such time as capital reserves are in excess of future
foreseeable working capital requirements of the Partnership.


                                       14
<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
                                   (UNAUDITED)


NOTE 4 - SUBSEQUENT EVENTS
--------------------------

Subsequent to September 30, 2008, the Partnership sold its Limited Partnership
interest in Carlinville Associate I, L.P. ("Carlinville"). Carlinville was
appraised with a value of $514,000 and the outstanding mortgage debt was
$483,978. The Limited Partnership interest was sold in December 2008 to the
Local General Partner. The 15-year compliance period expired in 2008 therefore
there will be no recapture of Low Income Housing Tax Credits. The Partnership
received $30,022 for its Limited Partnership interests in this Local Limited
Partnership, which was the difference between the appraised value and the
outstanding debt of the property. The $30,022 is being kept in the Partnership's
reserves to pay the costs incurred related to both dispositions and other
operating expenses of the Partnership.


                                       15
<PAGE>

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

FORWARD-LOOKING STATEMENTS

With the exception of the discussion regarding historical information, this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other discussions elsewhere in this Form 10-Q contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties and other factors which may involve known and unknown risks that
could cause actual results of operations to differ materially from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.

Risks and uncertainties inherent in forward looking statements include, but are
not limited to, the Partnership future cash flows and ability to obtain
sufficient financing, level of operating expenses, conditions in the Low Income
Housing Tax Credit property market and the economy in general, as well as legal
proceedings. Historical results are not necessarily indicative of the operating
results for any future period.

Subsequent written and oral forward looking statements attributable to the
Partnership or persons acting on its behalf are expressly qualified in their
entirety by cautionary statements in this Form 10-Q and in other reports filed
with the Securities and Exchange Commission. The following discussion should be
read in conjunction with the condensed unaudited financial statements and the
notes thereto included elsewhere in this filing.

The following discussion and analysis compares the results of operations for the
three and six months ended September 30, 2008 and 2007, and should be read in
conjunction with the condensed unaudited financial statements and accompanying
notes included within this report.

FINANCIAL CONDITION

The Partnership's assets at September 30, 2008 consisted of $54,000 in cash and
$13,000 in aggregate investments in the forty-eight Local Limited Partnerships.
Liabilities at September 30, 2008 consisted of $3,900,000 of accrued asset
management fees and payables due to the General Partner and/or its affiliates
for reimbursement of expenses paid.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2007. The Partnership's net loss for the three months ended
September 30, 2008 was $(116,000), reflecting an increase of approximately
$(28,000) from the $(88,000) net loss experienced for the three months ended
September 30, 2007. The increase in net loss is largely due the $(46,000)
increase in write off of advances to Local Limited Partnerships. During the
three months ended September 30, 2008 there were advances of $(46,000) made to
one Local Limited Partnership which was fully reserved for in full as of
September 30, 2008 compared to no advances made and reserved for during the
three months ended September 30, 2007. The advances made to the troubled Local
Limited Partnerships can vary each year depending on the operations of the
individual Local Limited Partnerships. The increase in advances made and
reserved for was partially offset by a decrease of $19,000 in legal and
accounting fees due to the timing of the accounting work being performed. The
equity in losses of Local Limited Partnership increased by $(3,000), which can
vary from year to year depending on the operations of the underlying Housing
Complexes of the Local Limited Partnerships. The distribution income decreased
by approximately $(2,000) which was offset by the $4,000 increase in reporting
fees. Distribution income and reporting fees can fluctuate from year to year due
to the fact that Local Limited Partnerships pay those fees to the Partnership
when the Local Limited Partnership's cash flow will allow for the payment.

SIX MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO THE SIX MONTHS ENDED SEPTEMBER
30, 2007. The Partnership's net loss for the six months ended September 30, 2008
was $(187,000), reflecting an increase of approximately $(35,000) from the
$(152,000) net loss experienced for the six months ended September 30, 2007.

                                       16
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED

The increase in net loss is largely due the $(46,000) increase in write off of
advances to Local Limited Partnerships. During the six months ended September
30, 2008 there were advances of $(46,000) made to one Local Limited Partnership
which was reserved for in full as of September 30, 2008 compared to no advances
made and reserved for during the six months ended September 30, 2007. The
advances made to the troubled Local Limited Partnerships can vary each year
depending on the operations of the individual Local Limited Partnerships. The
increase in advances made and reserved for was partially offset by a decrease of
$19,000 in legal and accounting fees due to the timing of the accounting work
being performed. There was also a $(5,000) increase in impairment expense. The
expense can vary each year depending on the annual decrease in Low Income
Housing Tax Credits allocated to the Partnership and the current estimated
residual value to the Partnership compared to the current carrying value to the
Partnership. The equity in losses of Local Limited Partnership increased
$(6,000), which can vary from year to year depending on the operations of the
underlying properties of the Local Limited Partnerships. Reporting fees
increased by $11,000 which was offset by an $(8,000) decrease in distribution
income. The reporting fees and distribution income fluctuate from year to year
due to the fact that Local Limited Partnerships pay those fees to the
Partnership when the Local Limited Partnership's cash flow will allow for the
payment.

LIQUIDITY AND CAPITAL RESOURCES

SIX MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
2007. The net decrease in cash during the six months ended September 30, 2008
was $(47,000) compared to a net decrease in cash for the six months ended
September 30, 2007 of $(3,000). The increase in cash used during the six months
ended September 30, 2008 is largely due to the $(46,000) advanced to a Local
Limited Partnership, due to operational issues with the Housing Complex. The
advance made to the Local Limited Partnership was partially offset by a $3,000
increase in operating income which was a combination of distribution income and
reporting fees. Additionally during the six months ended September 30, 2008 the
Partnership paid the General Partner or an affiliate $(25,000) for a combination
of accrued asset management fees and reimbursements for operating expenses
compared to $(24,000) paid during the six months ended September 30, 2007.

During the six months ended September 30, 2008, accrued payables, which consist
primarily of related party management fees and advances due to the General
Partner, increased by $127,000. The General Partner does not anticipate that the
balance of the accrued fees and advances will be paid until such time as capital
reserves are in excess of foreseeable working capital requirements of the
Partnership.

The Partnership expects its future cash flows, together with its net available
assets as of September 30, 2008, to be insufficient to meet all currently
foreseeable future cash requirements. Associates has agreed to continue
providing advances sufficient enough to fund the operations and working capital
requirements of the Partnership through August 31, 2010.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

         NOT APPLICABLE


                                       17
<PAGE>

ITEM 4T. CONTROLS AND PROCEDURES

(a)      Disclosure controls and procedures
         ----------------------------------

         As of the end of the period covered by this report, the Partnership's
         General Partner, under the supervision and with the participation of
         the Chief Executive Officer and Chief Financial Officer of Associates,
         carried out an evaluation of the effectiveness of the Partnership's
         "disclosure controls and procedures" as defined in Securities Exchange
         Act of 1934 Rule 13a-15 and 15d-15. Based on that evaluation, the Chief
         Executive Officer and Chief Financial Officer have concluded that, as
         of the end of the period covered by this report, the Partnership's
         disclosure controls and procedures were not effective to ensure that
         material information required to be disclosed in the Partnership's
         periodic report filings with SEC is recorded, processed, summarized and
         reported within the time period specified by the SEC's rules and forms,
         consistent with the definition of "disclosure controls and procedures"
         under the Securities Exchange Act of 1934.

         The Partnership must rely on the Local Limited Partnerships to provide
         the Partnership with certain information necessary to the timely filing
         of the Partnership's periodic reports. Factors in the accounting at the
         Local Limited Partnerships have caused delays in the provision of such
         information during past reporting periods, and resulted in the
         Partnership's inability to file its periodic reports in a timely
         manner.

         Once the Partnership has received the necessary information from the
         Local Limited Partnerships, the Chief Executive Officer and the Chief
         Financial Officer of Associates believe that the material information
         required to be disclosed in the Partnership's periodic report filings
         with SEC is effectively recorded, processed, summarized and reported,
         albeit not in a timely manner. Going forward, the Partnership will use
         the means reasonably within its power to impose procedures designed to
         obtain from the Local Limited Partnerships the information necessary to
         the timely filing of the Partnership's periodic reports.

(b)      Changes in internal controls
         ----------------------------

         There were no changes in the Partnership's internal control over
         financial reporting that occurred during the quarter ended September
         30, 2008 that materially affected, or are reasonably likely to
         materially affect, the Partnership's internal control over financial
         reporting.


                                       18
<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         NONE

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         NONE

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         NONE

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         NONE

ITEM 5.  OTHER INFORMATION

         NONE

ITEM 6.  EXHIBITS

31.1     Certification of the Principal Executive Officer pursuant to Rule
         13a-14 and 15d-14, as adopted pursuant to section 302 of the
         Sarbanes-Oxley Act of 2002. (filed herewith)

31.2     Certification of the Principal Financial Officer pursuant to Rule
         13a-14 and 15d-14, as adopted pursuant to section 302 of the
         Sarbanes-Oxley Act of 2002. (filed herewith)

32.1     Section 1350 Certification of the Chief Executive Officer. (filed
         herewith)

32.2     Section 1350 Certification of the Chief Financial Officer. (filed
         herewith)


                                       19
<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/  Wilfred N. Cooper, Jr.
    ---------------------------

Wilfred N. Cooper, Jr.
President and Chief Executive Officer of WNC & Associates, Inc.

Date:  August 12, 2009




By: /s/ Thomas J. Riha
    ------------------

Thomas J. Riha
Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc.

Date: August 12, 2009


                                       20