Wayne L. Stotler, the mentally retarded 19-year-old who was jailed in Fairfax County because no institution would accept him, will be transferred under court order to a state home for the retarded.

Fairfax Circuit Court Judged James Keith, after hearing the jail psychologist call the young man a "fire setter," ordered the transfer. Stotler, who has been in a jail cell by himself for 3 1/2 weeks probably will be sent to the Lynchburg School for the Mentally Retarded on Tuesday. Stotler, whose 54 IQ puts him in the bottom 1 Percentile of a scale of mental capacity, will be placed in a "behaviorial modification program," according to Assistant Commonwealth's Attorney Randall M. Starrett Jr., and his case will be reviewed yearly.

It was Starrett who reluctantly recommended that Stotler be jailed after the yound man was picked up by Prince William County officials for allegedly setting a number of brush fires in mid-April. Rather than formally charge Stotler, Prince William sent him to Fairfax, hoping that jurisdiction would be able to place him in an institition that treated the retarded.

But Fairfax officials who had arrested but not prosecuted Stotler on a fire-setting charge last year, were unable to find a willing institution. They had begun their fruitless search after Stotler's arrest on the Fairfax charge last May.

When he was picked up in Prince William, Stotler was staying with his sister in Dumfries - a placement that was supposed to be temporary until an appropriate institution could be found.

Starrett and social worker Putzi Naveen said various private and state institutions wouldn't admit Stotler because he had a record, compiled when he was a juvenile, as a fire setter, and therefore was a threat to other patients.

While staying in Dumfries, Stotler was enrolled in various out-patient vocational rehabilitation and mental therapy programs, but psychiatric reports said he needed full-time treatment and supervision.