The World Treasury of Children's Literature III, selected and with commentary by Clifton Fadiman; illustrated by Leslie Morrill (Little, Brown, $29.95; ages 8-up). Last year the distinguished man of children's letters Clifton Fadiman brought out the first two volumes of this World Treasury of Children's Literature. Intended primarily for younger children, that handsome boxed set earned plaudits from the reviewers, as much for its design as for the fineness of its selections (Roald Dahl, Russell Hoban, Maurice Sendak, among others). At that time, two more volumes -- for children 8-12 -- were envisaged; it now appears, however, that this one completes the series. Like its predecessors, Volume III is an attractive oversized collection, and will appeal to parents as much as youngsters. But it is not quite so satisfying a book.

In truth, it couldn't be. Picture books for little kids, with their brief texts, can be anthologized in their entirety even if the illustrations are reduced in size. But novels -- like The Hobbit, Pinocchio, The Wind in the Willows, Tom's Midnight Garden, The Borrowers -- can be represented only by selections, in this case generally the first chapters. In his commentary Fadiman naturally urges readers to go on to the full book; a worthy sentiment, but what is the child (or grown-up) to do who wants more of Harriet the Spy or The Wizard of Oz or The Phantom Tollbooth right now? As it happens, most of the novels chosen can be picked up as paperbacks for $2 or $3 each. The smart parent will check the contents page of The Treasury and then use it as a buying list.

Poems, of course, are presented in their entirety -- Kipling, Blake, tombstone epitaphs -- as are short stories, including three classics by science fiction authors: Ray Bradbury's "The Pedestrian," Isaac Asimov's hymn to the human brain, "The Feeling of Power," and Arthur C. Clarke's most famous tale, "The Nine Billion Names of God," with its unforgettable last sentence. At the volume's end, Fadiman proffers an essay "For Grown-Ups Only." There he cogently argues for accepting children's literature as more than just a tributary to the mainstream of books; that it is a major genre with distinctive themes, images and motifs; that it enjoys a long tradition and considerable body of criticism; and that its classics can be read with pleasure and instruction by people of any age. All in all, volume III of The World Treasury of Children's Literature is probably as good a book as could be done within its limits; but most parents will do better to view it as a sampler rather than a treasury.

Little Wizard Stories of Oz, by L. Frank Baum; illustrated by John R. Neill (Schocken, $14.95; ages 4-8). Most of the Oz novels are inended for, as they say, kids 8 to 80, but these half-dozen short shorts were written for quite young children. As bedtime reading, they are just about perfect: none should take more than 10 or 15 minutes to read, each features such favorites as The Cowardly Lion, Dorothy and Toto, Tik-Tok, Ozma, and Jack Pumpkinhead, and all maintain the author's promise that "no Baum story ever sent a child to bed to troubled dreams." Even the first story, which features the fierce Hungry Tiger obsessed with "a great desire to eat a few fat babies" will send babies to sleep with a smile. Oz authority Michael Patrick Hearn provides an informative introduction, and Neill's classic illustrations blaze with garish color.

The Little Father, by Gelett Burgess; pictures by Richard Egielski (Farrar, Straus and Giroux, $10.95; ages 5-up). Everyone knows Burgess' nonsense classic "The Purple Cow," and this earlier poem (of 1899) -- about a father who gradually shrinks to microscopic size -- is nearly as delightful. But the real charm in this edition lies in Egielski's pictures: they capture a marvelous Edwardianism -- overstuffed settees, Oriental rugs, elaborate flowered wall paper, anti- macassars, portly gentlemen, schoolboys in knickers. The colors are deep, bold and a little shocking, almost Mannerist. The scenes range from the comic -- a pint-sized father spanking his son with a match stick -- to the surreal, as when Pop, clad in turn-of-the-century swimming gear, flings a harpoon-like needle and thread at flies circling a bowl of soup. Egielski also deftly employs a couple of recurrent images: Father's huge stogie gradully dwarfing the shrinking man, the ever-present and ominous bottle of India ink. Ominous? Yes. "Now I never knew the reason, but I fancy that he shrank/ Because of all the Indian ink that Mr. Master drank."

Carpentry for Children, by Lester Walker (Overlook, $9.95; ages 7-up). Along with learning the three R's, every child shold have the chance to plant a garden, play an instrument, and build something out of wood. Several books introduce tools to younger kids, but this manual explains in detail how to construct just the things that kids like: a tugboat, blocks, stilts, a coaster car, raft, birdhouse, a doll's cradle. Walker's advice is sensible (he recommends the use of real tools, not toys), he provides lots of pictures of child craftsmen hammering away, and his plans are straightforward and easy to read. Indeed, the ideas are so inspiring that Moms and Dads will want to do more than just oversee their youngsters' work. Breathes there a man with soul so dead that he has not dreamed of building the fastest soap box racer on the block?

The Earth Gnome, translated by Wanda G,ag; illustrated by Margot Tomes (Putnam, $8.95; all ages). Wanda G,ag's first book, Millions of Cats, sits squarely among the classics of American children's literature, as do her somewhat free translations from the Grimm fairy tales. Normally she illustrated her books, but death intervened before she completed the pictures for More Tales from Grimm, the 1947 volume that included "The Earth Gnome." Happily, artist Margot Tomes provides her own appealing pen-and- ink and watercolor pictures to this pocket- sized volume, the tale of Dull-Hansl who rescues three princesses and wins a royal bride. Not an important book, but a charming one.

McWhinney's Jaunt and Mr. Twigg's Mistake, both by Robert Lawson (Little, Brown, $4.95 each; ages 7-up). Robert Lawson won both the Newbery and Caldecott awards; no mean feat. The first in this pair of classic reissues stars Professor Ambrose Augustus McWhinney -- your familiar dotty inventor, American style -- who accidentally discovers Z-Gas, a lighter-than-air substance with which he inflates the tires of his bicycle. Equipped with umbrella, top hat, and heavy- laden baskets, the good professor decides to bounce and soar cross the country to -- where else? -- Hollywood. Tall tales result, illustrated with amusing and very detailed drawings -- what one might call nonsense draughtsmanship. The second title here chronicles the escapades of Arthur Amory and his pet mole after the latter accidentally consumes the experimental Vitamin-X. The little animal soon begins to grow and grow, with suitably disastrous -- and delightful -- consequences.