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 December 31, 2007

                                       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: 0-23908

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

                 California                            33-0531301
          (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)

                                 (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 CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                               INDEX TO FORM 10-Q

                For the Quarterly Period Ended December 31, 2007



PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements

            Balance Sheets
                As of December 31, 2007 and March 31, 2007.....................3

            Statements of Operations
                For the Three and Nine Months Ended December 31, 2007
                         and 2006..............................................4

            Statement of Partners' Equity (Deficit)
                For the Nine Months Ended December 31, 2007....................5

            Statements of Cash Flows
                For the Nine Months Ended December 31, 2007 and 2006...........6

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

         Item 2. Management's Discussion and Analysis of Financial
                 Condition and Results of Operations..........................15

         Item 3. Quantitative and Qualitative Disclosures about Market Risks..16

         Item 4T. Controls and Procedures.....................................16


PART II. OTHER INFORMATION

         Item 1. Legal Proceedings............................................17

         Item 1A. Risk Factors................................................17

         Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.17

         Item 3.  Defaults Upon Senior Securities.............................17

         Item 4.  Submission of Matters to a Vote of Security Holders.........17

         Item 5.  Other Information...........................................17

         Item 6.  Exhibits....................................................17

         Signatures ..........................................................18

                                        2

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                   December 31, 2007                   March 31, 2007
                                                                -----------------------             -------------------
                                                               <S>                                 <C>
ASSETS

Cash                                                            $             252,354               $          239,164
Investments in Local Limited Partnerships, net (Note 2)                     1,754,445                        1,815,552
                                                                -----------------------             -------------------

         Total Assets                                           $           2,006,799               $        2,054,716
                                                                =======================             ===================

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities:
 Accrued fees and expenses due to
  General Partner and affiliates (Note 3)                       $           1,795,711               $        1,686,278
                                                                -----------------------             -------------------


Partners' equity (deficit):
  General Partner                                                            (168,021)                        (166,447)
  Limited Partners (30,000 Partnership Units
     authorized; 18,000 Partnership Units issued
     and outstanding)                                                         379,109                          534,885
                                                                -----------------------             -------------------


     Total Partners' Equity                                                   211,088                          368,438
                                                                -----------------------             -------------------

         Total Liabilities and Partners' Equity                 $           2,006,799               $        2,054,716
                                                                =======================             ===================
</TABLE>


                 See accompanying notes to financial statements
                                       3
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF OPERATIONS

              For the Nine Months Ended December 31, 2007 and 2006
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                   2007                                   2006
                                                  ------------------------------------   -------------------------------------
                                                    Three Months       Nine Months        Three Months        Nine Months
                                                 ------------------   ----------------   -----------------  -----------------
                                                <S>                  <C>                <C>                <C>
Distribution income                              $               -    $       20,356     $              -   $          1,884
Reporting fees                                                   -             4,250                    -              5,669
                                                 ------------------   ----------------   -----------------  ------------------

    Total operating income                                       -            24,606                    -              7,553
                                                 ------------------   ----------------   -----------------  ------------------

Operating expenses:
  Amortization (Note 2)                                      2,129             6,387                2,129              6,387
  Asset management fees (Note 3)                            45,346           136,038               45,346            136,038
  Legal and accounting fees                                  1,825            15,875                  108             15,742
  Other                                                        213             1,353                  975              3,020
                                                 ------------------   ----------------   -----------------  ------------------
    Total operating expenses                                49,513           159,653               48,558            161,187
                                                 ------------------   ----------------   -----------------  ------------------
Loss from operations                                       (49,513)         (135,047)             (48,558)          (153,634)

Equity in losses of
 Local Limited Partnerships (Note 2)                        (7,560)          (22,680)              (7,560)           (22,680)

Interest income                                                  6               377                  302                896
                                                 ------------------   ----------------   -----------------  ------------------

Net loss                                           $       (57,067)   $     (157,350)    $        (55,816)  $       (175,418)
                                                    ===============   ================   =================  =================

Net loss allocated to:
  General Partner                                  $          (571)   $       (1,574)    $           (558)  $         (1,754)
                                                    ===============   ================   =================  ==================

  Limited Partners                                 $       (56,496)   $     (155,776)    $        (55,258)  $       (173,664)
                                                    ===============   ================   =================  ==================

Net loss per Partnership Unit                      $            (3)   $           (9)    $             (3)  $            (10)
                                                    ===============   ================   =================  ==================

Outstanding weighted Partnership Units                      18,000            18,000               18,000             18,000
                                                    ===============   ================   =================  ==================
</TABLE>

                 See accompanying notes to financial statements
                                        4


<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                     STATEMENT OF PARTNERS' EQUITY (DEFICIT)

                   For the Nine Months Ended December 31, 2007
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                            General               Limited
                                                            Partner               Partners                Total
                                                        -----------------     ----------------   ----------------------
                                                       <S>                  <C>                 <C>
Partners' equity (deficit) at March 31, 2007            $      (166,447)     $       534,885     $             368,438

Net loss                                                         (1,574)            (155,776)                 (157,350)
                                                        -----------------     ----------------   ----------------------

Partners' equity (deficit) at December 31, 2007         $      (168,021)     $       379,109     $             211,088
                                                        =================     ================   ======================
</TABLE>

                 See accompanying notes to financial statements
                                        5
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS

              For the Nine Months Ended December 31, 2007 and 2006
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                              2007                      2006
                                                                        ------------------        ------------------
                                                                       <S>                       <C>
Cash flows from operating activities:
  Net loss                                                              $       (157,350)         $       (175,418)
     Adjustments to reconcile net loss to
       cash used in operating activities:
       Amortization                                                                6,387                     6,387
       Equity in losses of Local Limited Partnerships                             22,680                    22,680
       Change in accrued fees and expenses due
         to General Partner and affiliates                                       109,433                    98,719
                                                                        ------------------        ------------------

Net cash used in operating activities                                            (18,850)                  (47,632)
                                                                        ------------------        ------------------

Cash flows from investing activities:
    Distributions received from Local Limited Partnerships                        32,040                    32,040
                                                                        ------------------        ------------------
Net cash provided by investing activities                                         32,040                    32,040
                                                                        ------------------        ------------------

Net increase (decrease) in cash                                                   13,190                   (15,592)

Cash, beginning of period                                                        239,164                   253,910
                                                                        ------------------        ------------------
Cash, end of period                                                     $        252,354          $        238,318
                                                                        ==================        ==================

SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW INFORMATION:

  Taxes paid                                                            $              -          $              -
                                                                        ==================        ==================
</TABLE>

                 See accompanying notes to financial statements
                                       6
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

                For the Quarterly Period Ended December 31, 2007
                                   (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 nine months
ended December 31, 2007 are not  necessarily  indicative of the results that may
be expected for the fiscal year ending March 31, 2008. 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,
2007.

Organization

WNC California  Housing Tax Credits III, L.P. a California  Limited  Partnership
(the  "Partnership"),  was formed on October 5, 1992 under the laws of the state
of California and began  operations on July 19, 1993. The Partnership was formed
to invest primarily in other limited partnerships ("Local Limited Partnerships")
which own  multi-family  housing  complexes (the "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  agreements  of  limited   partnership   (the  "Local  Limited   Partnership
Agreement").

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

The Partnership shall continue to be 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 30,000 units of limited
partnership interest  ("Partnership  Units") at $1,000 per Partnership Unit. The
offering  of  Partnership  Units  concluded  in July 1994 at which  time  17,990
Partnership Units,  representing  subscriptions in the amount of $17,990,000 had
been accepted. During 1995, an additional $10,000 was collected on subscriptions
accepted   for  10   additional   Partnership   Units  and   previously   deemed
uncollectible.  The General  Partner has 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 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
properties  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.

                                        7

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended December 31, 2007
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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 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  Credit 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
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 properties, 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 the 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.

                                        8

<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATMENTS- CONTINUED

                   For Quarterly Period Ended December 31, 2007
                                   (Unaudited)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Substantially  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 a significant  amount of 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  Credit
compliance  period  risks  exist for  potential  recapture  of prior Low  Income
Housing Tax Credits.

No trading  market  for the 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  have agreed to continue  providing  advices  sufficient
enough to fund the operations and the Partnership through April 30, 2009.

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 IRS compliance  period for Low Income Housing Tax Credits Housing  Complexes
is generally 15 years from occupancy  following  construction or  rehabilitation
completion.  Associates was one of the first in the industry to offer syndicated
investments  using the Low Income Housing Tax Credits.  The initial programs are
completing their compliance  periods. As of December 31, 2007, none of the Local
Limited Partnerships had completed their 15 year compliance period.

With  that in  mind,  the  Partnership  is  continuing  to  review  the  Housing
Complexes,  with special emphasis on the more mature Housing Complexes including
those that have  satisfied  the IRS  compliance  requirements.  The review  will
consider 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 at any time by
the General  Partner in its  discretion.  As of December  31,  2007,  no Housing
Complexes have been selected for disposition.  While  liquidation of the Housing
Complexes that have met their  compliance  period continue to be evaluated,  the
dissolution of the Partnership was not imminent as of December 31, 2007.

Method  of  Accounting  For  Investments  in  Local  Limited  Partnerships.

ThePartnership  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 indicate

                                        9

<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATMENTS- CONTINUED

                   For Quarterly Period Ended December 31, 2007
                                   (Unaudited)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

individual  investment in a Local Limited  Partnership  for possible  impairment
whenever  events or changes in  circumstances  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 allocated to
the  Partnership  and the estimated  residual  value to the  Partnership.  If an
investment  is  considered  to be impaired,  the  impairment to be recognized is
measured by the amount by which the carrying  amount of the  investment  exceeds
fair value.  The  accounting  policies  of the Local  Limited  Partnerships  are
generally  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 December
31, 2007 and 2006 have been recorded by the Partnership  based on nine months of
reported  results  estimated  by  management  of the  Partnership.  Management's
estimate for the nine-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 is 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  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 (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   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 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 credit recapture.

Distributions  received from the Local Limited Partnerships are accounted for as
a  reduction  of  the  investment  balance.  Distributions  received  after  the
investment  has  reached  zero are  recognized  as  distribution  income.  As of
December 31, 2007, 17  investment  accounts in Local  Limited  Partnerships  had
reached a zero balance.

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.

Cash and Cash Equivalents

The  Partnership  considers  all  highly  liquid  investments  with an  original
maturity of nine months or less when  purchased  to be cash  equivalents.  As of
December 31, 2007 and March 31, 2007, the Partnership had no cash equivalents.

Income Taxes

No provision for income taxes has been  recorded in the financial  statements as
any liability and/or benefits for income

                                       10

<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATMENTS- CONTINUED

                   For Quarterly Period Ended December 31, 2007
                                   (Unaudited)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

taxes flows to the partners of the  Partnership and is their  obligation  and/or
benefit.  For income tax purposes  the  Partnership  reports on a calendar  year
basis.

Concentration of Credit Risk

At December 31,  2007,  the  Partnership  maintained a cash balance at a certain
financial institution in excess of the maximum federally insured amounts.

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 nine months  ended
December 31, 2007 and 2006 was $6,387.

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.

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

As of December 31,  2007,  the  Partnership  had  acquired  limited  partnership
interests in eighteen Local Limited Partnerships, each of which owns one Housing
Complex  consisting  of an  aggregate of 635  apartment  units.  The  respective
general  partners  of the  Local  Limited  Partnerships  manage  the  day-to-day
operations of the entities.  Significant  Local Limited  Partnership's  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 agreements,  of the operating profits and losses, taxable income and
losses and tax credits of the Limited Partnerships.

                                       11

<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATMENTS- CONTINUED

                   For Quarterly Period Ended December 31, 2007
                                   (Unaudited)

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

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

<TABLE>
<CAPTION>

                                                                         For the Nine                For the Year
                                                                         Months Ended                   Ended
                                                                      December 31, 2007             March 31, 2007
                                                                      -------------------         -------------------
                                                                     <S>                         <C>
Investments per balance sheet, beginning of period                    $       1,815,552           $         1,891,029
Equity in losses of Local Limited Partnerships                                  (22,680)                      (34,921)
Distributions received from Local Limited Partnerships                          (32,040)                      (32,040)
Amortization of capitalized acquisition fees and costs                           (6,387)                       (8,516)
                                                                      -------------------         -------------------
  Investments per balance sheet, end of period                        $       1,754,445           $         1,815,552
                                                                      ===================         ===================
</TABLE>

<TABLE>
<CAPTION>

                                                                  For the Nine Months
                                                                         Ended                  For the Year Ended
                                                                   December 31, 2007             March 31, 2007
                                                                 ----------------------       ----------------------
                                                                <S>                          <C>
Investments in Local Limited Partnerships, net                   $           1,624,554        $           1,679,274
Acquisition fees and costs, net of accumulated
amortization of $1,684,128 and $1,677,741                                      129,891                      136,278
                                                                 ----------------------       ----------------------
Investments per balance sheet, end of period                     $           1,754,445        $           1,815,552
                                                                 ======================       ======================
</TABLE>

                                       12

<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                     NOTES TO FINANCIAL STATMENTS- CONTINUED
                   For the Nine Months Ended December 31, 2007
                                   (Unaudited)

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

Selected  financial  information for the nine months ended December 31, 2007 and
2006 from the unaudited  combined  condensed  financial  statements of the Local
Limited Partnerships in which the Partnership has invested as follows:

<TABLE>
<CAPTION>

                             COMBINED CONDENSED STATEMENTS OF OPERATIONS
                                                               2007                      2006
                                                      ----------------------     --------------------
                                                     <S>                        <C>
Revenue                                               $          2,878,000       $        2,878,000
                                                      ----------------------     --------------------
Expenses:
     Operating expenses                                          2,047,000                2,047,000
     Interest expense                                              587,000                  587,000
     Depreciation and amortization                                 839,000                  839,000
                                                      ----------------------     --------------------

Total expenses                                                   3,473,000                3,473,000
                                                      ----------------------     --------------------

Net loss                                                          (595,000)                (595,000)
                                                      ======================     ====================

Net loss allocable to the Partnership                 $           (500,000)      $         (500,000)
                                                      ======================     ====================

Net loss recorded by the Partnership                  $            (23,000)      $          (23,000)
                                                      ======================     ====================
</TABLE>

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  and/or  the  Local  General  Partner  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
investment in certain of such Local Limited Partnerships could be impaired,  and
the loss and recapture of the related tax credits could occur.

                                       13

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended December 31, 2007
                                   (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 for the following items:

(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  $1,620,000.
     Accumulated  amortization  of these  capitalized  costs was  $1,490,107 and
     $1,483,720 as of December 31, 2007 and March 31, 2007, 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 1.5% of the gross proceeds.  As of the end
     of all periods  presented,  the Partnership  incurred  acquisition costs of
     $194,019,  which  have  been  included  in  investments  in  Local  Limited
     Partnerships.  Accumulated  amortization  was $194,019 as of ended December
     31, 2007 and March 31, 2007.

(c)  Annual Asset  Management  Fee. An annual asset  management fee in an amount
     equal to 0.5% of invested assets (the sum of the  Partnership's  Investment
     in Local  Limited  Partnership  Interests and the  Partnership's  allocable
     share of the amount of the  mortgage  loans on and other debts  related to,
     the Housing  Complexes owned by such Local Limited  Partnerships).  Fees of
     $136,038  were incurred  during each of the nine months ended  December 31,
     2007 and 2006. The  Partnership  paid the General Partner or its affiliates
     $25,000 and $33,750 of those fees during the nine months ended December 31,
     2007 and 2006, respectively.

(d)  Subordinated  Disposition Fee. A subordinated  disposition fee is 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, 2003 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 fees were earned during the
     periods presented.

(e)  The  Partnership  reimburses  the  General  Partner or its  affiliates  for
     operating expenses incurred in behalf of the Partnership. Operating expense
     reimbursements  are  $18,833  and  $22,331  during  the nine  months  ended
     December 31, 2007 and 2006, respectively.

The accrued  fees and  expenses  due to General  Partner  and/or its  affiliates
consist of the following:
<TABLE>
<CAPTION>

                                                                   December 31, 2007            March 31, 2007
                                                                 ----------------------      ----------------------
                                                                <S>                         <C>
Reimbursement for expenses paid by the General
   Partner and/or its affiliate                                  $               1,575       $               3,180
Accrued asset management fees                                                1,794,136                   1,683,098
                                                                 ----------------------      ----------------------
                                                                 $           1,795,711       $           1,686,278
                                                                 ======================      ======================
</TABLE>

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

Item 1A. Risk Factors

No material changes in risk factors as previously disclosed in the partnership's
Form 10-K.
                                       14

<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,  our  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 our behalf are  expressly  qualified in their
entirety  by  cautionary  statements  in this Form 10-Q and in other  reports we
filed with the  Securities  and Exchange  Commission.  The following  discussion
should  be read in  conjunction  with the  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 nine months ended  December  31, 2007 and 2006,  and should be read in
conjunction with the combined  condensed  financial  statements and accompanying
notes included within this report.

Financial Condition

The Partnership's assets at December 31, 2007 consisted primarily of $252,000 in
cash and aggregate  investments  in the eighteen Local Limited  Partnerships  of
$1,754,000.  Liabilities at December 31, 2007 primarily  consisted of $1,796,000
of accrued annual  management  fees and  reimbursement  for expenses paid by the
General Partner and/or its affiliates.

Results of Operations

Three Months Ended December 31, 2007 Compared to Three Months Ended December 31,
2006.  The  Partnership's  net loss for the three months ended December 31, 2007
was $(57,000),  reflecting an increase of $1,000 from the $(56,000) net loss for
the three months ended  December 31, 2006.  The increase in net loss is due to a
$1,000  increase  in  legal  and  accounting  fees,  due  to the  timing  of the
accounting work performed.

Nine Months Ended  December 31, 2007 Compared to Nine Months Ended  December 31,
2006. The Partnership's net loss for the nine months ended December 31, 2007 was
$(157,000),  reflecting a decrease of $18,000 from the  $(175,000)  net loss for
the nine months ended  December 31, 2006.  The decrease in net loss is primarily
due to an increase of $17,000 in distribution  income and reporting fees for the
nine months ended December 31, 2007.  The  differences in the reporting fees and
distribution  income are due to the fact that  Local  Limited  Partnerships  pay
distributions  and  reporting  fees to the  Partnership  when the Local  Limited
Partnership's cash flow will allow for the payment.

                                       15

<PAGE>


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

Liquidity and Capital Resources

Nine Months Ended  December 31, 2007 Compared to Nine Months Ended  December 31,
2006.  Net cash  provided  during the nine months  ended  December  31, 2007 was
$13,000  compared to net cash used in the nine months ended December 31, 2006 of
$(16,000).  The  $29,000  net  change  in cash was  primarily  due to a  $29,000
decrease in the cash used in operating  activities,  which was attributable to a
$18,000 decrease in cash received in operating income and $11,000 less cash paid
to the General Partners and/or affiliates for accrued asset management fees.

During the nine months ended December 31, 2007, accrued payables,  which consist
primarily  of  asset  management  fees to the  General  Partner  or  affiliates,
increased  by  $109,000.  The General  Partner  does not  anticipate  that these
accrued  fees will be paid in full until such time as  capital  reserves  are in
excess of future foreseeable working capital requirements of the partnership.

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 April 30, 2009.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         NOT APPLICABLE

Item 4T. 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 fund'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  Officier  and Chef  Financial  Officer  have
concluded  that  as of  the  end of the  period  covered  by  this  report,  the
partnership's  disclosure controls and procedures were adequate and effective in
timely  alerting  them  to  material  information  relating  to the  partnership
required to be included in the partnership's periodic SEC filings.

Changes  in  internal  controls.  There  were no  changes  in the  Partnership's
internal control over financial reporting that occurred during the quarter ended
December  31,  2007  that  materially  affected,  or are  reasonably  likely  to
materially affect, the partnership's  internal control over financial reporting.

This  quarterly   report  does  not  include  an   attestation   report  of  the
Partnership's  registered public accounting firm regarding internal control over
financial  reporting.  Management's report was not subject to attestation by the
partnership's  registered  public accounting firm pursuant to temporary rules of
the Securities and Exchange  Commission  that permit the  partnership to provide
only management's report in this quarterly report.

                                       16


<PAGE>


Part II. OTHER INFORMATION

Item 1.  Legal Proceedings

         NONE

Item 1A. Risk Factors

          No material  changes in risk  factors as  previously  disclosed in the
          Partnership's form 10-K.

Item 2.  Unregistered Sale 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-15(e)  and  15d-15(e),  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-15(e)  and  15d-15(e),  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)

                                       17

<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 CALIFORNIA HOUSING TAX CREDITS III, L.P.

By:  WNC California Tax Credit Partners III 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: September 24, 2008




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

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

Date: September 24, 2009, 2008





                                       18