Enhanced Government -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-21793

Name of Fund: BlackRock Enhanced Government Fund, Inc. (EGF)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: Donald C. Burke, Chief Executive Officer, BlackRock
Enhanced Government Fund, Inc., 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing
address: P.O. Box 9011, Princeton, NJ, 08543-9011

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 12/31/2008

Date of reporting period: 07/01/2008 – 09/30/2008

Item 1 – Schedule of Investments

BlackRock Enhanced Government Fund, Inc.             
Schedule of Investments September 30, 2008 (Unaudited)    (Percentages shown are based on Net Assets) 
 
            Par     
    Asset-Backed Securities        (000)             Value 
 
 
 
 
    Asset Backed Securities Corp. Home Equity Line Trust         
    Series 2006-HE7 Class A2, 3.257%, 11/25/36 (a)    $ 1,122    $ 1,103,499 
    First Franklin Mortgage Loan Asset Backed Certificates         
    Series 2005-FF2 Class M2, 3.647%, 3/25/35 (a)    3,220    1,803,200 
    GSAA Home Equity Trust Series 2005-1 Class AF2,         
    4.316%, 11/25/34 (a)        1,866    1,702,124 
    Securitized Asset Backed Receivables LLC Trust         
    Series 2005-0P1 Class M2, 3.657%, 1/25/35 (a)    2,000    1,613,169 
    Securitized Asset Backed Receivables LLC Trust         
    Series 2005-OP2 Class M1, 3.637%, 10/25/35 (a)    1,025    645,750 
    Soundview Home Equity Loan Trust Series 2007-OPT5         
    Class 2A2, 4.157%, 10/25/37 (a)        2,500    2,073,047 
 
 
 
 
    Total Asset-Backed Securities - 4.3%            8,940,789 
 
 
 
 
Industry    Corporate Bonds             
 
 
 
 
Electric Utilities - 0.8%    PPL Capital Funding, 6.70%, 3/30/67 (a)        2,000    1,620,774 
 
 
 
 
Insurance - 1.4%    The Allstate Corp., 6.50%, 5/15/57 (a)(b)        2,000    1,254,646 
    ZFS Finance (USA) Trust IV, 5.875%, 5/09/32 (a)(c)    500    341,050 
    ZFS Finance (USA) Trust V, 6.50%, 5/09/67 (a)(c)    2,000    1,340,000 
           
                2,935,696 
 
 
 
 
    Total Corporate Bonds - 2.2%            4,556,470 
 
 
 
 
    U.S. Government Agency Mortgage-Backed Securities         
 
 
 
    Fannie Mae Guaranteed Pass-Through Certificates:         
       4.50%, 10/15/23 (d)        4,000    3,897,500 
       4.66%, 7/01/10        1,872    1,870,903 
       4.681%, 2/01/13        5,368    5,341,263 
       5.00%, 10/15/23 - 10/01/35 (b)(d)        31,571    30,908,678 
       5.24%, 4/01/12        7,939    7,993,410 
       5.274%, 10/01/35        5,059    5,133,743 
       5.50%, 10/15/23 - 10/15/38 (b)(d)        59,769    59,727,581 
       5.707%, 2/01/12        2,622    2,697,670 
       6.00%, 7/01/36 - 10/15/38 (d)        41,748    42,305,841 
       6.50%, 10/15/38 (d)        4,500    4,613,904 
       6.60%, 1/01/11        5,160    5,301,156 
    Freddie Mac Mortgage Participation Certificates:         
       4.50%, 5/01/34 (b)        1,072    1,018,677 
       5.00%, 5/01/37 - 8/01/37 (b)        14,577    14,208,504 
       5.50%, 4/01/37        719    716,092 
       6.00%, 10/15/38 (d)        2,500    2,530,470 
       6.50%, 10/15/38 (d)        4,200    4,306,310 
    Ginnie Mae MBS Certificates:             
       5.00%, 11/15/35        2,779    2,730,032 
       5.50%, 11/15/35        2,344    2,350,932 
 
 
 
 
                                          Total U.S. Government Agency Mortgage-Backed Securities -
    94.4%            197,652,666 
 
 
 
 
    U.S. Government Agency Mortgage-Backed Securities -         
    Collateralized Mortgage Obligations             
 
 
 
 
    Fannie Mae Trust Series 353 Class 2, 5%, 8/01/34 (e)    4,194    949,714 

1

BlackRock Enhanced Government Fund, Inc.             
Schedule of Investments September 30, 2008 (Unaudited)    (Percentages shown are based on Net Assets) 
 
    U.S. Government Agency Mortgage-Backed Securities -    Par     
    Collateralized Mortgage Obligations        (000)             Value 
 
 
 
 
    Fannie Mae Trust Series 367 Class 2, 5.50%, 1/25/36 (e)    $ 3,826    $ 839,575 
    Fannie Mae Trust Series 378 Class 5, 5%, 7/01/36 (e)    4,346    853,240 
    Fannie Mae Trust Series 3006-8 Class HN,             
    4.858%, 3/25/36 (a)(e)        1,903    167,123 
    Freddie Mac Multiclass Certificates Series 232 Class IO,         
    5%, 8/01/35 (e)        4,468    980,661 
                                             Freddie Mac Multiclass Certificates Series 2611 Class KT, 4.771%,
    4/15/17 (a)        610    594,997 
    Freddie Mac Multiclass Certificates Series 2654 Class YD, 5%,         
    12/15/26 (e)        6,262    342,519 
                                             Freddie Mac Multiclass Certificates Series 2996 Class SJ, 2.098%,
    6/15/35 (a)(e)        3,430    290,456 
                                             Freddie Mac Multiclass Certificates Series 3042 Class EA, 4.50%,
    9/15/35        2,680    2,434,084 
    Freddie Mac Multiclass Certificates Series 3183 Class KI,         
    6%, 12/15/34 (e)        3,436    251,168 
    Ginnie Mae Trust Series 2005-47 Class SP,             
    0.853%, 8/20/32 (a)(e)        26,979    1,300,167 
    Ginnie Mae Trust Series 2005-87 Class C, 5.328%, 9/16/34 (a)    10,000    9,972,468 
    Ginnie Mae Trust Series 2006-3 Class C, 5.235%, 4/16/39 (a)    10,000    9,510,772 
    Ginnie Mae Trust Series 2006-30 Class IO,             
    0.80%, 5/16/46 (a)(e)        8,694    410,865 
 
 
 
 
                                             Total U.S. Government Agency Mortgage-Backed Securities -
    Collateralized Mortgage Obligations - 13.8%            28,897,809 
 
 
 
 
    Non-U.S. Government Agency Mortgage-Backed Securities         
 
 
 
Collateralized Mortgage    Bank of America Funding Corp. Series 2007-5 Class 4A3, 3.655%,         
Obligations - 5.8%    7/25/37 (a)(e)        18,333    1,408,835 
                                             Bank of America Mortgage Securities Inc. Series 2003-J Class 2A1,
    4.084%, 11/25/33 (a)        666    660,820 
                                             Bear Stearns Alternative-A Trust Series 2004-13 Class A1, 3.577%,
    11/25/34 (a)        667    426,423 
                                             Bear Stearns Asset Backed Securities Series 2007-AC2 Class X,
    0.25%, 3/25/37 (e)        12,805    125,803 
                                             CS First Boston Mortgage Securities Corp. Series 2005-11 Class
    6A5, 6%, 12/25/35        1,472    1,286,462 
                                             Citi Mortgage Alternative Loan Trust Series 2007-A5 Class 1A7,
    6%, 5/25/37 (e)        924    113,089 
    Citigroup Mortgage Loan Trust, Inc. Series 2005-12 Class 1A2,         
    1.615%, 8/25/35 (a)(e)        11,756    473,052 
                                             Countrywide Alternative Loan Trust Series 2006-41CB Class 2A17,
    6%, 1/25/37        2,322    1,833,404 
    First Horizon Alternative Mortgage Securities Series 2007-FA2         
    Class 1A11, 1.245%, 4/25/37 (a)(e)        20,276    1,104,842 
    Homebank Mortgage Trust Series 2005-4 Class A1, 3.477%,         
    10/25/35 (a)        2,313    1,507,118 
                                             Residential Asset Securitization Trust Series 2004-A9 Class A3,
    1.83%, 12/25/34 (a)(e)        11,701    760,588 

2

BlackRock Enhanced Government Fund, Inc.             
Schedule of Investments September 30, 2008 (Unaudited)    (Percentages shown are based on Net Assets) 
 
            Par     
    Non-U.S. Government Agency Mortgage-Backed Securities    (000)             Value 
 
 
 
                                                   WaMu Mortgage Pass-Through Certificates Series 2005-AR7 Class
    A1, 4.919%, 8/25/35 (a)        $ 2,551    $ 2,414,895 
    Washington Mutual Alternative Mortgage Pass-Through         
    Certificates Series 2005-8 Class 1A4, 1.215%, 10/25/35 (a)(e)    4,442    130,242 
           
                12,245,573 
 
 
 
 
Commercial Mortgage-Backed    Citigroup Commercial Mortgage Trust Series 2007-C6 Class A4,         
Securities - 2.8%    5.889%, 12/10/49 (a)        475    405,992 
                                                    Greenwich Capital Commercial Funding Corp. Series 2006-GG7
    Class A4, 5.914%, 7/10/38 (a)        1,500    1,362,984 
                                                    JPMorgan Chase Commercial Mortgage Securities Corp. Series
    2006-CB15 Class A4, 5.814%, 6/12/43 (a)        2,500    2,244,246 
                                                    JPMorgan Chase Commercial Mortgage Securities Corp. Series
    2006-LDP7 Class A4, 5.875%, 4/15/45 (a)        2,000    1,808,479 
               
                5,821,701 
 
 
 
 
    Total Non-U.S. Government Agency Mortgage-Backed         
    Securities - 8.6%            18,067,274 
 
 
 
 
    U.S. Government & Agency Obligations             
 
 
 
 
    Federal Farm Credit Bank, 4.55%, 6/08/20        3,500    3,376,471 
    Federal Home Loan Banks, 5.40%, 10/27/11 (f)    3,525    3,530,890 
    Federal Home Loan Banks, 5%, 3/14/14        285    293,952 
    Federal Home Loan Banks, 5.375%, 6/13/14        640    670,586 
    Federal Home Loan Banks, 5.25%, 9/12/14        640    665,266 
    U.S. Treasury Notes, 2.875%, 1/31/13        25,235    25,300,056 
    U.S. Treasury Notes, 3.125%, 8/31/13        110    110,842 
    U.S. Treasury Notes, 3.875%, 5/15/18        1,050    1,056,890 
 
 
 
 
    Total U.S. Government & Agency Obligations - 16.7%        35,004,953 
 
 
 
    Preferred Securities             
 
 
 
 
    Capital Trusts             
 
 
 
 
Diversified Financial    JPMorgan Chase Capital XXII, 6.45%, 1/15/87        2,000    1,449,086 
Services - 0.7%                 
 
 
 
 
    Total Capital Trusts - 0.7%            1,449,086 
 
 
 
 
    Preferred Stocks        Shares     
 
 
 
 
Commercial Banks - 0.1%    Wachovia Corp. Series J, 8%        35,300    294,755 
 
 
 
 
Diversified Financial    Citigroup, Inc. Series AA, 8.125%        25,000    412,500 
Services - 0.2%                 
 
 
 
 
    Total Preferred Stocks - 0.3%            707,255 
 
 
 
 
    Trust Preferreds        Par     
            (000)     
 
 
 
 
Capital Markets - 0.4%    Morgan Stanley Capital Trust VIII, 6.45%, 4/15/67    $ 2,000    942,400 
 
 
 
Media - 0.7%    Comcast Corp., 6.625%, 5/15/56        2,000    1,416,000 
 
 
 
 
    Total Trust Preferreds - 1.1%            2,358,400 
 
 
 
 
    Total Preferred Securities - 2.1%            4,514,741 
 
 
 
 
    Total Long-Term Investments (Cost - $304,096,581) -         
    142.1%            297,634,702 
 
 
 
 

3

BlackRock Enhanced Government Fund, Inc.             
Schedule of Investments September 30, 2008 (Unaudited)    (Percentages shown are based on Net Assets) 
 
        Beneficial     
        Interest     
                                                                           Short-Term Securities        (000)       Value 
 
 
 
                                                                           BlackRock Liquidity Series, LLC Cash Sweep Series,         
                                                                           2.59% (g)(h)        $ 3,510    $    3,509,597 
 
 
 
                                                                           Total Short-Term Securities (Cost - $3,509,597) - 1.7%        3,509,597 
 
 
                                                                           Total Investments Before TBA Sale Commitments (Cost -         
                                                                           $307,606,178*) - 143.8%            301,144,299 
 
 
 
                                                                           TBA Sale Commitments             
 
 
 
                                                                           Fannie Mae Guaranteed Pass-Through Certificates:         
                                                                                 5.00%, 10/15/23 - 10/01/35        (11,700)    (11,505,979) 
                                                                                 5.50%, 10/15/23 - 10/15/38        (7,800)    (7,784,447) 
                                                                                 6.00%, 7/01/36 - 10/15/38        (17,991)    (17,832,760) 
 
 
 
                                                                           Total TBA Sale Commitments             
                                                                           (Proceeds - $37,545,273) - (17.7)%            (37,123,186) 
 
 
 
                                                                           Total Investments (Cost - $270,060,905) - 126.1%        264,021,113 
                                                                           Liabilities in Excess of Other Assets - (26.1)%        (54,663,499) 
   
 
                                                                           Net Assets - 100.0%        $ 209,357,614 
       

*      The cost and unrealized appreciation (depreciation) of investments as of September 30, 2008, as computed for federal income tax purposes were as follows:
 
Aggregate cost    $ 307,606,178 
   
Gross unrealized appreciation    $ 4,952,167 
Gross unrealized depreciation    (11,414,046) 
   
Net unrealized depreciation    $ (6,461,879) 
   

(a)      Variable rate security. Rate shown is as of report date.
 
(b)      All or a portion of security held as collateral in connection with swaps.
 
(c)      Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.
 
(d)      Represents or includes a to-be-announced transaction. The Fund has committed to purchasing securities for which all specific information is not available at this time.
 
(e)      Represents the interest only portion of a mortgage-backed security and has either a nominal or a notional amount of principal.
 
(f)      All or a portion of security have been pledged as collateral in connection with open financial futures contracts.
 
(g)      Investments in companies considered to be an affiliate of the Fund, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:
 
        Net     
        Activity     
       Affiliate        (000)    Income 
 
 
 
       BlackRock Liquidity Series, LLC Cash Sweep             
       Series    $ (13,598)    $ 176,541 
 
 
(h) Represents the current yield as of report date.         

4

BlackRock Enhanced Government Fund, Inc.         
Schedule of Investments September 30, 2008 (Unaudited)         
 
 
             • Financial futures contracts purchased as of September 30, 2008 were as follows:     
 
                Unrealized 
        Expiration    Face    Appreciation 
                   Contracts    Issue    Date    Value    (Depreciation) 
 
 
 
 
                                 46    2 year U.S. Treasury Bond    December 2008    $ 9,790,351    $ 27,774 
                               543    10-Year U.S. Treasury Bond    December 2008    $ 63,109,358    (867,983) 
                                 21    Eurodollar Future    December 2008    $ 5,075,677    (7,065) 
                                 21    Eurodollar Future    March 2009    $ 5,067,539    26,799 
                                 22    Eurodollar Future    June 2009    $ 5,296,979    35,821 
                                 15    Eurodollar Future    September 2009    $ 3,604,296    28,517 
                                 15    Eurodollar Future    December 2009    $ 3,593,671    27,329 
                                 15    Eurodollar Future    March 2010    $ 3,585,983    29,017 
                                 16    Eurodollar Future    June 2010    $ 3,817,849    28,351 
                                 11    Eurodollar Future    September 2010    $ 2,621,184    16,204 
                                 11    Eurodollar Future    December 2010    $ 2,618,321    12,329 
                                 11    Eurodollar Future    March 2011    $ 2,617,627    10,548 
                                 12    Eurodollar Future    June 2011    $ 2,854,349    10,201 
 
 
 
 
                   Total                $ (622,158) 
               
             • Swaps outstanding as of September 30, 2008 were as follows:         
 
 
            Notional    Unrealized 
            Amount    Appreciation 
            (000)    (Depreciation) 
 
 
 
 
                   Receive a fixed rate of 4.68528% and pay a floating rate         
                   based on 3-month LIBOR             
                   Broker, Deutsche Bank AG London             
                   Expires September 2009        $ 130,000    $ (1,871,536) 
 
                   Pay a fixed rate of 4.625% and receive a floating rate based         
                   on 3-month LIBOR             
                   Broker, Deutsche Bank AG London             
                   Expires March 2013        $ 50,000    (1,298,075) 
 
                   Receive a fixed rate of 4.17% and pay a floating rate based on         
                   3-month LIBOR                 
                   Broker, Credit Suisse First Boston             
                   Expires June 2013        $ 50,000    304,078 
 
                   Pay a fixed rate of 5.705% and receive a floating rate based         
                   on 3-month LIBOR             
                   Broker, Deutsche Bank AG London             
                   Expires June 2017        $ 50,000    (4,684,309) 
 
                   Receive a fixed rate of 4.65% and pay a floating rate based on         
                   3-month LIBOR                 
                   Broker, Credit Suisse First Boston             
                   Expires December 2017        $ 28,600    470,394 

5

BlackRock Enhanced Government Fund, Inc.         
Schedule of Investments September 30, 2008 (Unaudited)         
 
 
    Notional     
    Amount    Unrealized 
    (000)    Depreciation 
 
 
                   Pay a fixed rate of 5.88% and receive a floating rate based on         
                   3-month LIBOR         
                   Broker, Deutsche Bank AG London         
                   Expires June 2018    $ 36,836    $ (3,264,379) 
 
                   Pay a fixed rate of 5.9575% and receive a floating rate based         
                   on 3-month LIBOR         
                   Broker, Deutsche Bank AG London         
                   Expires December 2037    $ 25,000    (5,002,389) 
 
 
                   Total        $ (15,346,216) 
       

6

BlackRock Enhanced Government Fund, Inc.

Schedule of Investments September 30, 2008 (Unaudited)

  		•  Effective January 1, 2008, the Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 clarifies the definition of fair value, establishes a framework for measuring fair values and requires additional disclosures about the use of fair value measurements. Various inputs are used in determining the fair value of investments, which are as follows:
     
     
  		• Level 1 - price quotations in active markets/exchanges for identical securities
     
     
  		• Level 2 - other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or other market-corroborated inputs)
     
     
  		• Level 3 - unobservable inputs based on the best information available in the circumstance, to the extent observable inputs are not available (including the Fund's own assumption used in determining the fair value of investments)
     
      The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund's policy regarding valuation of investments and other significant accounting policies, please refer to the Fund's most recent financial statements as contained in its semi-annual report.
     

    The following table summarizes the inputs used as of September 30, 2008 in determining the fair valuation of the Fund's investments:

    Valuation    Investments in    Other Financial 
    Inputs    Securities    Instruments* 
    		 
    		 
    Level 1    $ 28,051,174    $ (622,158) 
    Level 2    235,969,939    (15,346,216) 
    Level 3    -    - 
    		 
    		 
    Total    $ 264,021,113    $ (15,968,374) 
       
    		 

      * Other financial instruments are swaps and futures.

    7

    Item 2 – Controls and Procedures

    2(a) – The registrant’s principal executive and principal financial officers or persons performing
    similar functions have concluded that the registrant’s disclosure controls and procedures (as
    defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the
    “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the
    evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act
    and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

    2(b) – There were no changes in the registrant’s internal control over financial reporting (as
    defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal
    quarter that have materially affected, or are reasonably likely to materially affect, the
    registrant’s internal control over financial reporting.

    Item 3 – Exhibits

    Certifications – Attached hereto

    Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
    Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by
    the undersigned, thereunto duly authorized.

    BlackRock Enhanced Government Fund, Inc.

    By: /s/ Donald C. Burke
    Donald C. Burke
    Chief Executive Officer of
    BlackRock Enhanced Government Fund, Inc.

    Date: November 24, 2008

    Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
    Company Act of 1940, this report has been signed below by the following persons on behalf
    of the registrant and in the capacities and on the dates indicated.

    By: /s/ Donald C. Burke
    Donald C. Burke
    Chief Executive Officer (principal executive officer) of
    BlackRock Enhanced Government Fund, Inc.

    Date: November 24, 2008

    By: /s/ Neal J. Andrews
    Neal J. Andrews
    Chief Financial Officer (principal financial officer) of
    BlackRock Enhanced Government Fund, Inc.

    Date: November 24, 2008