Peter O'Malley carded a 2-under 70 to move into second at 10-under 206 while five players lie two shots further back at minus-eight, including defending champion Michael Campbell (68) of New Zealand.
Els began the day with a three-shot lead and got off to a quick start with a birdie on the second. However, he ran into trouble with bogeys on the fourth and sixth, finding greenside bunkers on both holes.
'I had a bit of a shaky start but after No. 6 I really thought I played OK.' said Els.
The two-time U.S. Open winner countered with a birdie on the seventh while Australian Stephen Leaney had begun a charge of his own.
Leaney picked up two strokes with back-to-back birdies from the second and added another on the par-5 ninth to move into a tie with Els at 11-under.
He jumped into the lead momentarily with a birdie on the par-5 10th but Els matched him with a birdie at the ninth.
The South African regained the lead outright on the following hole. Despite finding the rough off the tee he managed to reach the green in two and rolled home the 15-foot putt for an eagle to move to 14-under.
Meanwhile Leaney began to fall apart on the 11th with the first of four bogeys over his next five holes to finish at 8-under.
Els played at even-par to close out the round. Sunday he will be looking for his seventh win on the European Tour and his first since the Standard Life Loch Lomond in 2000.
'I don't know if I'm all that comfortable. You've got to be careful when the wind's blowing out there,' said Els. 'The greens were a bit softer out there so you could be a bit more aggressive.'
O'Malley got within three shots of Els but three-putted the 17th for a bogey to drop to 10-under.
Campbell and Leaney were joined by Englishmen Barry Lane (68) and David Howell (70) as well as Richard Lee (71) of New Zealand.
Lee torched the Composite Course at the Royal Melbourne Golf Club with eight birdies and an eagle en route to a course record 10-under 62 during Friday's second round.
The 28-year-old got off to a hot start in the third round holing out from the fairway for an eagle on the first but managed only two birdies to go along with five bogeys the rest of the way.
'I'm very happy with a 71. I had a chance to do better but a couple of bad drives towards the end just cost me,' he said.
A group of seven players are knotted at seven-under 209 including Greg Norman.
Norman. a playing partner of Els, bogeyed the third but hit his approach to within six feet for a birdie on the sixth. He added back-to-back birdies around the turn but ran into trouble with three bogeys on the back nine.
The 46-year-old finished alongside three of his fellow countrymen in Adam Scott (70), Peter Fowler (70) and Robert Allenby (71), Mark Pilkington (73) of Wales and the English duo of Nick Faldo (69) and Philip Golding (70).
Full-Field Scores from the Heineken Classic