Proposed rules for carrying out the court-ordered removal of lead-based paint from public housing, published by the Department of Housing and Urban Development, set a timetable of up to seven years for completing the work.

The total bill is expected to exceed $500 million, according to a knowledgeable source. A HUD spokeswoman said she could not discuss the cost because the department's estimates are preliminary.

The final version of the regulations must be in place by Aug. 1, with testing of public housing projects for lead paint to be completed within two years. All lead paint would have to be removed within five years after that, the spokeswoman said.

U.S. District Court Judge Gerhard A. Gesell ruled last December that HUD had "unnecessarily delayed" compliance with a 1982 court order to begin removing lead paint from public housing. The order, upheld on appeal, came in a lawsuit filed by tenants in a Southeast Washington public housing project after a child living in Stanton Dwellings was hospitalized with lead poisoning.

Gesell gave HUD until early 1987 to prepare regulations for eliminating lead-paint dangers in Federal Housing Administration-insured homes and housing subsidized by other HUD programs.

Under its proposed regulations for public housing, HUD would remove paint containing 0.7 milligrams or more lead per square centimeter from surfaces where it is an "immediate hazard" because of cracking or flaking. "Intact" paint on "chewable" surfaces, such as corners of walls, doors and protruding woodwork, also would be removed. Cracked paint on surfaces five feet above the floor and intact paint on flat surfaces would be classified as potential hazards, to be checked "at least yearly," the spokeswoman said. Units that house children who show elevated levels of lead in their blood would get priority for testing and removal.

Although the District Court ordered removal of dangerous paint "as far as practicable," the HUD spokeswoman said, "I suggest that if you don't have enough funds it's not practicable."

Cheryl C. Burke, an attorney for the tenants who sued HUD, disputed that interpretation and expressed objections to the proposed rules, particularly "the idea of waiting until children have lead poisoning" to classify removal of paint from their homes "a Type 1 emergency" -- HUD's designation for work to be be done first.