This works in C64 version. Not sure if other versions...
Once you get songaxe or bardsword, you can cast unlimited bard songs. You need to abuse this power in combat! There are other items that let you do this (consult gamefaqs bard's tale 3 item faq).
You can keep your AC low by recasting Sanctuary Score (song #3) every round in combat. It stacks until you hit AC -50. This is a great idea if you are in range of some very powerful melee monsters and you can save yourself a lot of spell points since there is no point in wasting magic on them if your fighters can take them out AND never get hit.
However, once you get enough of that, what you can also do is stack song number 4 which will let you regenerate some HP per round but passively! However, it also stacks! The higher level your bard (or perhaps it is based on your instrument) the more healing it seems to do per casting. This is great against enemy spell casters since you can get like +100 HP per round passively!
Now here is the best part. If you win a battle, just go into Party Dissention mode. ("P").
Have everyone but your bard defend, bard casts song #4. Continue battle to repeat. Should heal your guys up fairly fast and is great if you are low on spell points.