Vietnam said yesterday that occupation of some Vietnamese hills by a battalion of Chinese troops "makes the situation along the Vietnam-China border, which has already been tense, become extremely dangerous."

The statement by a spokesman for the Vietnamese Foreign Ministry, released here today by the official Vietnam News Agency, escalates the dispute over the hills in an area where thousands of troops on both sides are poised for battle.

China and Vietnam have been accusing each other of illegally occupying territory along their sometimes ill-defined border for the past several months, but neither side has initiated a major clash of regular army troops. In recent weeks, however, foreign observers have reported major movements of Chinese arms and troops to the border, increasing the chance of conflict with the well-fortified Vietnamese forces.

The Vietnamese spokesman said the hills in Caoloc District of Langson Province occupied by the Chinese was "about two kilometers inside Vietnamese territory." He said: "the invaders built fortifications and remain there and have been daily firing mortars, machine guns and... recoilless rifles on surrounding villages, causing many losses in lives and property to the Vietnamese people in that border area."

The Vietnamese have been complaining about Chinese military activity in the area since Saturday, when theysaid the hills were first occupied. Yesterday's protest was by far the strongest, however, and seemed to indicate some fear that further Chinese action would follow.

The spokesman said: "The Vietnamese people... are resolved to defend their independence and sovereignty and the territorial integrity of their motherland."

The Vietnamese news agency said medical and first aid services in the area where the hills are located were being upgraded "in preparation for possible hostilities."

A Sunday report by China's official news agency charged that Vietnamese forces which had held the hills earlier had "opened fire with light and heavy machineguns on a Chinese patrol unit, killing two Chinese."

Apparently referring to the same elevated position that is the subject of Hanoi's latest complaint, the Chinese agency said, "The other Chinese patrols were compelled to return fire in self-defense and recovered the hills. This was a due punishment to the invaders."

Hanoi said this story was "made up... to cover up China's crime and deceive public opinion."

Earlier charges of occupation of alien territory in the border area during the last several months have not been pursued, perhaps because of retreats by the troops involved, doubts over the actual location of the border or lack of desire on either side to precipitate a full-scale confrontation. The official New China News Agency report Sunday did not say specifically that the hills were in Chinese territory although it left that impression.

Tensions along the Sino-Vietnamese border have been growing since hostilities broke out a year ago between Hanoi and a Chinese-backed Cambodian government. The Cambodian leadership supported by Peking recently fell in a major Vietnameseled invasion of the small Indo-Chinese country.

Chinese warnings to Hanoi in the last few weeks have been contradictory. Some have said in effect that the Cambodians would have to fight their own battles and others have suggested China might "punish" Hanoi for incursions on the Chinese border.

Many foreign analysts think both China and Vietnam wish to avoid a war that would hurt their already crippled national economies, but both countries have increased their border forces. Some estimates say Chinese troops in the area now number as many as 150,000.