World number three Mickelson carded a third-round 69 on the Blue Monster course to move to 16-under-par after seeing his two-shot halfway lead eroded by a 67 from Watney as the pair vied for the lead all day in the final group.

McIlroy, the youngest player in the field and bidding to become the youngest tournament winner in USPGA Tour history at the age of 19 years, 10 months and 12 days, had been going well at 13-under before a run of three bogeys in four holes dropped him back to 10-under.

McIlroy, though, stayed composed at the final hole to make par for a round of 72 to give himself a fighting chance on the last day on the same mark as Australia's Rod Pampling and American Justin Leonard.

"It was a pretty difficult day out there and I thought I was doing very well," McIlroy said. "I just let a few slip at the end.

"It could have been better but I am still there or thereabouts."

Ahead of McIlroy and four shots back on the leaders in a tie for third are Jeev Milka Singh of India and Colombia's Camilo Villegas, with Denmark's Soren Kjeldsen and Spain's Alvaro Quiros joining Americans Jim Furyk, Charley Hoffman and Perry on 11-under.

Best round of the day belonged to another Dane, Soren Hansen, who was eight-under for the day and nine under for the week following a third-round 64.

England's Luke Donald was also on nine-under following a 68.

Ireland's world number five Padraig Harrington, who had started at seven-under, had been well placed at 10-under before a double bogey at the 17th sent him back to eight-under in a round of 71.

Harrington's playing partner, Paul Casey, also had a bad finish, going bogey, double bogey to end the day at seven-under alongside Ryder Cup team-mates Oliver Wilson and Ian Poulter.

Justin Rose carded a 68 to reach five-under and Ross Fisher remained at four-under following a 72, while Richard Finch went to three-under for the week with a 69.

Lee Westwood had a bad third round, his 78 dropping the Worksop golfer to four-over-par but Ireland's Graeme McDowell and Darren Clarke improved their standings.

McDowell shot a 70 to move to one-over-par, while Clarke will start the final round at level-par following a 71.

Spain's Sergio Garcia had begun the tournament with an outside chance of replacing Tiger Woods as world number one but any hopes of a victory, with Woods needing to finish lower than 27th, disappeared when the world number two returned a lacklustre pair of 72s.

Garcia had a better day on Saturday, shooting a 68, but Woods matched him as he eased back into his old routine in his first strokeplay event for nine months following reconstructive knee surgery.

Woods shot a 68 to move to seven-under, nine off the lead.

Australia's Aaron Baddeley was disqualified midway through his round after realising he had committed an infringement in the second round and therefore signed an incorrect scorecard.

Having driven into the edge of a water hazard on the third hole yesterday, Baddeley kicked a stone out of the way as he took his stance.

Finding a near-identical spot today, Baddeley asked a nearby rules official if he could do the same thing again only to be told it was against the rules.

"When he said that, I was like: 'Ooh, I think I did that yesterday'," Baddeley admitted.

"I spoke to (referee) Mike Shea and told him what happened and he said, unfortunately, that will be a disqualification. And I sort of knew that."

Mickelson refused to consider tomorrow's final round a two-horse race between him and Watney.

"We've seen a lot guys shoot seven, eight-under-par - it's out there today," Mickelson said.

"Guys that are three or four shots back, if they shoot that, they can get right back into contention.

"So Nick and I need to play well to separate ourselves from the rest of the field and if we are able to do that it could turn into a match play situation.

"But right now I don't think we can approach it like that."