Courtland Milloy's column ''Resurgence of Racism on Campus'' {Metro, June 21} might imply that the University of Virginia condones racial bigotry or harassment. Especially misleading -- and harmful -- is the statement that ''whites at southern schools such as the University of Virginia seem to think it's okay to call blacks derogatory names.'' The recent record suggests otherwise.

When a clearly racist spray-painted message was found on a university street one morning in late March, the community mobilized quickly and with indignation. The university police removed the message at once. That morning, along with my own sense of outrage, I asked the police and our student affairs staff to take any possible steps to find the offender and to prevent a recurrence.

A public letter that same day put 13 of our deans and other senior administrators on record that ''such discriminatory and intolerant acts are not acceptable.'' Student leaders at once announced the formation of a new group, Students Toward a New Diversity to increase student understanding of cultural and racial differences.

The university's board of visitors created a new committee on intergroup relations, chaired by a senior black educator on the board, which met within two weeks of the incident for a remarkably candid exchange. At its final meeting of the year, the board reaffirmed its condemnation of ''any and all such acts of discrimination, hatred, bigotry and intolerance directed toward any members of the university community.''

Closing the year, I made clear in my commencement speech that there is "no place in an academic community {for} the intentional infliction of harm on persons of different races, religions, values or beliefs.''

Despite the challenge of which Mr. Milloy writes, our new student council president took office on May 1. He is not, as the column implies, the first black student to hold that office. That barrier was broken in 1972. While other barriers remain, it is vital to recognize the progress that has been made and the overwhelming commitment of a diverse student body to tolerance in all forms. ROBERT M. O'NEIL President, University of Virginia Charlottesville