According to the late night schedule, Challenge will stop showing Knightmare from Tuesday, no episodes will be screened on Sunday or Monday either, therefore not showing all of series three!!!!
At least from their website, it does look like the schedule has changed slightly. But it seems that the late night episode has merely been moved (indeed, moved to a slightly more friendly timeslot), not cut. The weekday early evening showings remain unchanged.
Here's the showings over the next week, lifted from their website. Of course, it's best to check times yourself before watching- this old hag-bald wizard composite will not be held responsible for any missed episodes. (Also note that the very early morning episodes of one day will be the repeated episode from the day before.)
Saturday 28th: 1.30am, 10am, 10.05pm
Sunday 29th: 10am, 6.25pm, 10.05pm
Monday 30th: 6pm
Tuesday 1st: 1.10am, 6pm, 11.30pm
Wednesday 2nd: 6pm, 11.30pm
Thursday 3rd: 6pm, 11.30pm
So, the main change- if indeed it's a permanent change- looks to be the 1.10am weekday repeat moving to 11.30pm. I don't see anything wrong with that. Hopefully more people will be awake to watch at that time.

"Sometimes of the Grey, but always of the Green, dearie. Shurrup Brollachan! Have you seen Festus, my dear? I need to take him back to Cornwall. " [cackle]