July 29, 1981

The Department of Consumer Affairs began the strict enforcement of laws on unlicensed outdoor cafes yesterday. The move was an attempt to control at least one element of the increasing encroachment on sidewalk space by restaurant owners, florists, peddlers, fruit and vegetable stands, newsstands and others whose sprawling displays often force pedestrians to walk in the street. It was not an auspicious beginning, however. The crackdown quickly broke down, to the delight of a crowd that had assembled to watch Consumer Affairs officials, police officers and sanitationmen confiscate eight white formica tables in front of Lo Spuntino Restaurant, at 117 Mulberry Street in the heart of Little Italy.

''I shall, I think, spend half the time in tears.'' - Prince Charles. (A8:1.)

William Wyler, the movie director whose career began in 1929 and included such films as ''Ben Hur,'' ''Wuthering Heights'' and ''The Little Foxes,'' died of a heart attack yesterday at his home in Beverly Hills. He had just returned from London, where he had been honored in a retrospective series by the British Film Institute. He was 79 years old. Mr. Wyler won three Academy Awards as best director, a record surpassed only by John Ford, who won four, and matched by Frank Capra. Mr. Wyler was nominated 13 times, the three Oscar-winning films being ''Mrs. Miniver'' (1942), ''The Best Years of Our Lives'' (1946) and ''Ben Hur'' (1959). Among his other film credits were ''Jezebel,'' ''The Desperate Hours,'' ''Roman Holiday,'' ''Friendly Persuasion,'' ''The Children's Hour,'' ''The Collector'' and ''Funny Girl.'' Before ''Funny Girl,'' he was to have directed ''The Sound of Music.'' He had begun casting and preproduction work on that film, which became one of the biggest hits of all time. But he decided, according to his daughter Judith Sheldon, ''that he just didn't feel comfortable with the material, and didn't want to make a musical. I'm sure he regretted that later.''

The Reagan White House and the Democratic leadership of the House of Representatives battled today for the votes that would assure victory tomorrow when the House chooses a tax bill. Partisans on both sides said the contest between the Administration's tax bill and the one fashioned by Democrats on the Ways and Means Committee was a toss-up. ''We don't think we're ahead yet,'' David R. Gergen, the senior White House spokesman, said tonight. ''The President will work the phones tomorrow,'' before the House votes, he added.

City and state correction officials yesterday told a Federal judge who is considering how to ease the overcrowding of jails in New York City that neither of their systems could safely handle any more inmates. This leaves to the judge, Morris E. Lasker of Federal District Court in Manhattan, the decision as to which overcrowded system will have to take more prisoners, and how soon. While there is a third possibility - for Judge Lasker to issue an order resulting in the release of prisoners - there was no indication in the court hearing yesterday that he would do so. Benjamin Ward, New York City's Commissioner of Correction, summed up the situation facing the judge this way in his testimony: ''Where will the riot take place?'' Ruling Expected Today Judge Lasker is expected to hand down at least a tentative ruling today on New York City's request that the state be ordered to accept all prisoners who belong in its prisons within 48 hours after transfer papers are completed. In New York State, municipal jails are used to hold people accused of crimes, but not yet convicted, and those sentenced to less than one year. Those sentenced to more than a year go to state prisons. But all over the state, at every level, prisons and jails are already full, over capacity or a hairs-breadth from being full.