Retired Army Gen. Charles H. Bonesteel III, 68, former commander-in-chief of United Nations forces in Korea, died Wednesday at the Woodbine Nursing Home.

He headed both the U.N. forces and the U.S. forces in Korea and also commanded the U.S. 8th Army from September, 1966, until retiring on Oct. 1, 1969.

It was a period marked by turmoil in Korea and highlighted by North Korea's capture of the intelligence ship U.S.S. Pueblo on Jan. 23, 1968.

Gen. Bonsteel issued a number of warnings to the North Koreans to halt truce violations. At the same time, he carried out the American policy of using restraint in countering North Korean attacks and raids in the demilitarized zone.

Born in Plattsburg, N.Y., Gen. Bonesteel graduated from West Point in 1931. He represented the fourth generation of his family to graduate from the academy.

He then attended Oxford University as a Rhodes scholar, earning a degree in politics, philosophy and economics in 1934.

He served with the Corp. of Engineers and was sent to London as an observer during the "blitz" in the first half of 1941. Shortly before the attack on Pearl Habour, President Roosevelt sent him to command the first American troops in Iceland.

After the United States entered the war that December, Gen. Bonesteel saw duty in England, North Africa, Sicily and France. He particiapted in the invasion of Sicily and was an operational planner for the Normandy invasion.

In the latter part of World War II, he was chief of the policy section and then chief of the strategic survey section with the War Department general staff.

Gen. Bonesteel was a member of the U.S. delegation to the United Nations Conference in San Francisco in 1945, and represented the War Department at subsequent foreign ministers' meeting in Paris, New York and Moscow.

He helped direct the formulation of the Marshall Plan as special assistant to Under Secretary of State Robert Lovett. From 1948 to 1950, he was special assistant to Averell Harriman, the chief of the Marshall Plan in Europe.

Gen. Bonesteel also was executive director of the European Economic Council. Later he was on the planning board of the National Security Council.

Other assignments included special assistant for policy to the chairman of the Joint Chiefs of Staff. infantry division commander in Europe and director of special studies in the office of the Army Chief of Staff.

After retiring from military service, Gen. Bonesteel was a consultant on international affairs to such organizations as the Stanford Research Institute. He was a trustee of the Institute for Defense Analsis, a vice president of the Association of the U.S. Army Aid Association and the American-Korean Foundation.

He wore the Distinguished Service Medal and Legion of Merit, both with Oak Leaf Cluster, and many foreign awards.

He is survived by his wife, Alice Pratt Bonesteel, of the home in Arlington; a son, Charles H. of Bedford, Mass., and two grandchildren.

The family suggests that expressions of sympathy be in the form of contributions to the Institute of Eye Research, Retina Foundation, in Boston.