Authorities on homelessness and child welfare said yesterday that the stabbing deaths of two handicapped children at a District shelter Tuesday illustrated the stresses of shelter life, while an attorney for the children questioned whether the legal system could have done anything to prevent their deaths.

"I think this could be seen as an isolated incident. But I see this as a time bomb," said Tony Russo, executive director of ConServe, a nonprofit group that contracts with the District to find permanent housing for homeless families.

"I think it's clear that children living in shelters are at an exceptionally high risk. The question then is, should they be separated from their families, and the answer is, absolutely no," Russo said. "We believe the place for children is with their families. But they are staying in these shelters far too long."

Dwayne Stephen Barnes, 8, and Jerome Clayton Barnes, 4, who both had cerebral palsy, were found stabbed to death shortly after midnight Wednesday in a room at the Capitol City Inn, a shelter for homeless families in Northeast where they had been living with their mother for more than 10 months.

Charged in the slayings was Stanley Simpson, 31, a man who says he is the children's father and who, police said, has told investigators he killed them and tried to kill himself because he could no longer endure the difficulties of the family's homelessness. The children's mother, Venita Barnes, 32, was not with Simpson and the children at the time of the stabbings, police said.

The deaths of the children shocked some families at the shelter and several parents worried that they may "flip out" from stress, said Kathleen Owens, a psychiatric social worker who talked with many families yesterday. A team of mental health workers from St. Elizabeths Hospital scheduled a meeting last night with the families.

In responding to the deaths, city welfare officials have highlighted their earlier, unsuccessful attempt to gain custody of the children in D.C. Superior Court, where they argued the children had been neglected.

But attorney Denise Wiktor, appointed to represent the children in the neglect case, yesterday said the city's custody request hinged almost solely on the mother's alleged drug abuse problem and never involved Simpson.

Although police said Wednesday that Barnes had been arrested numerous times on drug violations, court records do not indicate any drug charges. Barnes has a prior conviction for receiving stolen goods.

Wiktor said the city's custody petition had relied mostly on year-old information that Barnes was a drug addict and that no evidence of violence in the family was presented. Simpson, she said, was never a factor in the case, and the court heard little or nothing about him before the custody request was denied in September.

Wiktor, who had recommended to the court that the children remain with their mother, yesterday said, "I've been sitting here since the news going over it and over it, wondering whether I would do anything different. I don't think I would. I had no indications the family might be deteriorating."

A spokesman for the D.C. Department of Human Services disputed Wiktor's account of the neglect case yesterday but refused to give details, saying neglect matters are confidential."END NOTES

Spokesman Charles Seigel said department officials never intended to suggest that their request for custody was based on Simpson's involvement with the family, or that they had reason to believe the children would come to violent harm.

Judge Henry H. Kennedy, a seven-year D.C. Superior Court veteran who refused the city's custody request last September, said he could not recall specifics of the case. "I do recall that it was a very heated hearing," Kennedy said.

Pearl Jackson, the Human Services social worker assigned to help the Barnes case, yesterday declined to comment. According to Wiktor, Jackson had visited the family at the shelter as often as twice a week.

Simpson's relationship to the slain children remained unclear. Although he claimed to be their father and apparently had stayed with the family at the Capitol City Inn off and on since February, city officials said he was not enrolled as a resident. Nor was Simpson considered part of the family under the welfare program from which Barnes and her children received assistance.

Simpson, charged with two counts of first-degree murder while armed, was recovering yesterday at the Washington Hospital Center after surgery for a stab wound to the chest. His father, Henry Simpson of the 600 block of Morton Street NW, described the younger Simpson as "a nice kid . . . . He was like anybody else. He didn't bother nobody."

According to Superior Court records, Simpson had been arrested several times since 1976 on charges ranging from grand larceny to marijuana possession, distribution of Preludin, an amphetamine, and heroin distribution. Records indicate a single conviction for possession of Preludin four years ago.

At Melvin C. Sharpe Health School, which specializes in educating handicapped youths, teachers of the Barnes children said the slayings were difficult to fathom. "They had smiles that probably covered the whole Washington, D.C., area," said instructor Yvonne Harris. "They appeared to be very happy kids. They really did."

Staff writer Marcia Slacum Greene contributed to this report.