Kelly Robbins (65), Angela Stanford (66) and Se Ri Pak (66) share third place at 12-under-par 204.
Ellis played steady at the start of her round with five pars but dropped a shot at the par-3 sixth when she three-putted.
The sixth would be the last mistake hole for Ellis. At the eighth, she knocked her second shot to two feet to set up birdie and closed the front side at Berkleigh Country Club with a seven-footer for birdie at No. 9.
Ellis continued her birdie run on the second nine as she hit a 9-iron to six feet at the 10th and added another with a seven-foot birdie putt at 11. She used an 8-iron off the tee at the 135-yard 12th and ran home the 15-footer for her fifth consecutive birdie.
'The front nine, I don't know why, is not set up for me,' said the 26-year-old Australian. 'After that I am more confident. On the par-3s I am very confident with the clubs in my hand and the tee shots there. And that is how it has been in the past couple weeks with the par-3s.'
Ellis had one birdie tear left and it began at the 15th when she capitalized on another par-3. She hit a 6-iron to nine feet to set up birdie before a three-foot birdie at the par-5 16th. Ellis hit a wedge to eight feet at the 17th for her third straight birdie and took the 54-hole lead for the first time on the LPGA Tour.
Ellis shared second place two weeks ago at the Women's British Open, which Webb ended up winning. Last week was another joint second for Ellis at the Canadian Women's Open, but the former Futures Tour player is ready to earn her first victory on the LPGA Tour.
'I want to win as does everyone else out there, but this is my second year and I am going to learn a lesson,' said Ellis. 'I am going to do the best I can and if that is 7-under par or 4-over then that is it.'
Webb followed her second-round 65 with a 5-under 67 on Saturday. She was 2-under par on her front nine and continued to roll on the back, starting with a 15-foot birdie at the 10th. She drained a long birdie putt at the 13th hole and added an eight-foot birdie at 16 to get within striking distance of her third title of 2002.
'I'm pretty pleased with my round,' said Webb. 'It's hard to feel 67 is as good after a 65. I didn't hit it as well, but I did hit good iron shots. I tried to make putts, but I'm a couple shots out of lead, and it's still anyone's tournament.'
Danielle Ammaccapane, a co-leader after the second round, managed a 1-under 71 and is tied with Joanne Morley in sixth place. The duo stands at 10-under-par 206.
Wendy Doolan, the other co-leader with Ammaccapane, shot an even-par 72 and shares eighth place with Kelli Kuehne and Janice Moodie, who shot matching rounds of 67. The group is 9-under par.
Two of the LPGA Tour's young stars made moves up the leaderboard Saturday. Lorena Ochoa, who topped the Futures Tour money list to earn an LPGA Tour card for 2003, and Natalie Gulbis shot 66s in the third round and are part of a group tied for 11th at minus 8.
Full-field scores from Betsy King Classic