He said it posed a question mark over China's dealings with US law enforcement agencies over triad investigations.

The meeting between China's most senior security chief and the heads of a Hongkong crime syndicate was monitored by the territory's anti-triad detectives. It took place at the glittering gala opening of a new venture in Beijing.

On their visit, carried out under cover of a legitimate business trip, the Sun Yee On leaders are also understood to have met senior party officials.

Hongkong police sources claimed there had been similar contact between Mr Tao and gang bosses before a previous speech in support of triads last year, when he referred to gang members as ''patriotic'' and ''good people''.

A number of Hongkong detectives believe the timing of Thursday's press conference by 58-year-old Mr Tao was ''politically'' motivated.

His comments coincide with a crackdown on the Sun Yee On, Hongkong's most powerful gang, by the Organised Crime and Triad Bureau.

Police officers fear they will lose informers and witnesses will refuse to give evidence in the run-up to 1997 following the comments.

The remarks, and the likely negative result on junior police officers and the public, are to be raised in ''morale'' reports to headquarters and could be passed to the Governor, Mr Chris Patten.

Mr Li and the Deputy Director, Crime, Mr Tsang Yam-pui are due to visit Beijing this week for talks with senior Chinese security officials, including Mr Tao.

''It was politically timed,'' said a senior anti-triad officer. ''It will put Li Kwan-ha in a defensive position when he is up there.'' A senior Government official said: ''It is a sad tale and illustrative of their thinking.'' He did not think the comments were specifically aimed at undermining Sino-British negotiations over Hongkong although he admitted it would not help.

Legislative Council Security Panel convener Mrs Elsie Tu last night described the comments as ''appalling''.

''What Mr Li has to do is to make Mr Tao explain what he meant,'' Mrs Tu said. ''And ask him what is the difference between a good gangster and a bad gangster. He talks about triads as if they are good guys.'' But her real fears are for the future, as she claims the gangs are already powerful and have strong links to some - but not all - police officers.

''It looks as if it is going to be worse not better after 1997,'' she said.

''They [triads] are becoming the underworld government, especially in the New Territories. These are the people who are organising crime in Hongkong.'' Mrs Tu, who wants Mr Li to address the Security Panel on the issue, called for the Independent Commission Against Corruption to take over triad cases to eliminate the risk of police investigations being influenced by gang links.

Legislator Mrs Miriam Lau Kin-yee said: ''Hongkong must maintain its law and order. I can't accept triads as good people, and as far as the police are concerned, I have great confidence in them.'' Hongkong police officers know Chinese authorities made official contact with senior triads in the territory about five years ago and that there have been regular meetings, both here and abroad, since then.

Detectives believe a number of senior triads, who have made substantial sums from their illegal activities, want to distance themselves from their pasts and become ''legitimate'' businessmen in mainstream society, including the film world.

Mr Tao said China ''vehemently opposed any of these organisations engaging in crimes such as murder, arson and looting. At the same time, one must also see some members or some organisations have renounced past wrongdoings and started to do good things''.

He did not explain what ''good things'' referred to, but certain triads, in particular the Sun Yee On, have invested heavily across the border over the last few years, apparently with the knowledge and support of Beijing.

These investments, specifically by the powerful and well-structured Sun Yee On in the entertainment field, run into hundreds of millions of dollars and spread from Shenzhen and Guangdong to Beijing.

One experienced anti-triad detective said: ''We will lose our witnesses.

''It happened the last time,'' he said in reference to another speech by Mr Tao last year in a similar vein.

''We're falling over ourselves to get people to come forward and give evidence against triads and this is bound to have an adverse effect.

''Who wants to give evidence if they have the support of Beijing.

Triad membership is illegal in Hongkong although this officer feels these repeated comments could pave the way for a change in the law post-1997 in reference to Mr Tao's comments about them ''renouncing past wrongdoings''.

''You cannot be a triad and not be a criminal which leads one to believe they will change the law when they come here,'' he said.

A third detective said it would affect the evidence against given high level triads with influence across the border.

All the police officers spoken to collectively described Mr Tao's comments as ''stupid, ridiculous, absurd''.