One of the fastest growing means of financing housing, tax-exempt mortgage revenue bonds, may soon feel the restraining hand of government.

In his recent budget statement, President Carter said he would propose legislation to limit the use of these bonds to benefit low-and moderate-income families or for "other narrowly targeted public policy objectives."

Proponents of the bonds point out that they can provide funds for mortgages at well below current rates -- say, 8 percent instead of 10 or 11 percent -- and thereby help keep down the soaring cost of housing. Detractors, particularly the administration, contend that they represent a double public subsidy for the wealthy: those buying the tax-free bonds and those benefitting from low-interest rates. Others contend that these issues can potentially disrupt both the mortgage and municipal bond markets.

The first mortgage revenue bonds were issued last summer by the city of Chicago. The $100 million issue provided funds, funneled through a savings and loan association, for 2,148 loans at well below current rates. Since then the volume of local mortgage bonds has topped $500 million.

A hundred new issues are expected by spring in many parts of the country. E.F. Hutton & Co. Inc., the brokerage company that put together the first bond offering, predicts an annual volume of $6 billion, while another analyst suggests that these issues may eventually account for between 10 and 40 percent of the $110 billion-a-year mortgage market.

In Chicago only borrowers with a combined family income of $40,000 or less were eligible for loans made with funds from these mortgage revenue bonds. Yet the $40,000 ceiling and word of at least one $120,000 West Coast condominium purchased with these funds lead the Department of Housing and Urban Development and the Treasury to complain about federal subsidies for the rich.

Chicago recently announced a second offering of $150 million, with a yield permitting loans to be made at 7.99 percent. The income ceiling was lowered to $29,500 for 85 percent of the loans, with the remaining 15 percent left at $40,000.

Although perhaps intended to quiet federal wrath, the net effect was to set the levels at the actual levels reached in the first issue.Then 89 perent of the applicants had combined annual incomes of less than $30,000, while the average was $20,750.

Other changes will limit to 15 percent of the total loan volume the amount that can be made available for conversion of rental units to condominiums and to 1 percent that can be used to finance units in any one building. U.S. League of Savings Associations executive vice president Norman Strunk, in a letter to the Treasury, suggested the ceiling be lowered to around $12,000 or to 80 percent of median income. It would limit loans to those properties below the median price.

The league would also prohibit making such loans to current owners or on debt-free property. The Treasury, busy preparing legislative proposals for the administation, is considering these and other options such as limiting the volume of bond offerings.

A Treasury official, who asked that his name not be used, said that $6 billion in tax exempt offerings could entail a revenue loss of about $2 billion. But what bothers Treasury most is that investors in upper-income tax brackets, who would be most likely to buy the bonds, would receive moe of a federal subsidy than actually goes to the person getting the low-rate mortgage. The Treasury would prefer to have wealthy persons support housing by, for example, buying fully taxable Money Market Certificates at their local S&Ls.

Underwriters, as well as the Treasury, have expressed concern that a large volume of mortgage bonds could upset the traditional bond market for schools and multi-family structures.

The Congressinal Budget Office recently estimated these bonds could drive up the rates up 1/4 point on municipals in general and 3/4 point on housing bonds.

Because the bonds are mortgage backed, they are considered very safe, an added attraction for investors who might otherwise buy municipals or corporates. Chase Manhattan recently warned about the "possibility of an explosion" in the volume of mortgage revenue bonds.

Then, too, if the amount of money sought by cities, counties and states were to increase substantially, the interest rates offered to attract investors would also have to increase. The eventual result -- higher mortgage interest rates all around -- would be self-defeating, the Treasury reasons.

But, of course, the 1,000 localities that some federal government officials predict will float mortgage bond offerings in the next two years don't see it that way now.