THE authorities have warned that no breakdown of law and order would be tolerated at Tung Tau Estate in Wong Tai Sin, where residents have threatened to burn down a hostel for the mentally handicapped. Mr Anthony Chan Wai-kwan, assistant director of Social Welfare, who has been the subject of verbal abuse from residents, said yesterday: ''Law and order must be upheld. I think we are prepared to tolerate threats, but we draw the line at violence. We will not countenance bodily harm to any residents of the hostel or damage to hostel property.'' He said the Police, City and New Territories Administration and the Social Welfare Department would be keeping a very careful eye on the situation to ensure no harm came to anyone. Mr Chan repeated the government's stand - that the hostel for 40 severely mentally handicapped adults would be built at Tung Tau Estate with or without the blessing of the residents. He was sorry to be told that the more militant faction among the residents had managed to push aside those advocating a more tolerant approach. ''But Hongkong is a society of law and order and the rule of law will prevail. We don't want any confrontations and we are willing to make concessions, up to a point,'' Mr Chan said. The department has come under fire for some of the concessions it has been willing to make to appease the residents. These have included moving the entrance of the hostel so it would not share the lift lobby with the residents and moving and enlarging the mutual aid centre (MAC) for the residents. ''On the matter of shifting the entrance of the hostel, we were prepared to give in because we feel this small concession will not interfere with the running of the hostel. ''We also agreed to move the MAC to the second floor and provide it with 20 square metres of space instead of the usual 15 square metres, because our ultimate goal is for the residents to accept the severely mentally handicapped.'' Mr Chan said two other requests were denied. The first was for a toilet bowl and wash basin in the MAC. The department was prepared to fund these, but the Housing Department objected on the grounds that no other MAC enjoyed them. The other request was turned down by the department itself. This was for a public toilet inside the hostel for residents using recreational facilities in the block. He remained convinced that the residents could be ''brought round'' if they would be prepared to stand still just long enough to take part in a public forum on the severely mentally handicapped. ''If only they would do that, they would soon realise that these childlike people are no danger to anyone. If they would just talk to us, we would be able to convince them,'' Mr Chan said. Mr Chan estimates the hostel should be able to open by October, barring any further disruptions.