The three-dimensional (3D) diffusion radiative transfer equation, which utilizes a four-term spherical harmonics expansion for the scattering phase function and intensity, has been efficiently solved by using the full multigrid numerical method. This approach can simulate the transfer of solar and thermal infrared radiation in inhomogeneous cloudy conditions with different boundary conditions and sharp boundary discontinuity. The correlated k-distribution method is used in this model for incorporation of the gaseous absorption in multiple-scattering atmospheres for the calculation of broadband fluxes and heating rates in the solar and infrared spectra. Comparison of the results computed from this approach with those computed from plane-parallel and 3D Monte Carlo models shows excellent agreement. This 3D radiative transfer approach is well suited for radiation parameterization involving 3D and inhomogeneous clouds in climate models.