The Papua New Guinea police commissioner, Gari Baki, says criminals, illegal profiteers and those with no respect for the rule of law or others, living around the Porgera gold project in Enga Province, are on notice.
In a statement, Mr Baki says these people will face the full force of the law if they continue to engage in illegal activities.
This comes after police burnt down what they say were around 50 illegal shacks within the Porgera Special Mining Lease area.
There have been other reports of up to 300 homes destroyed.
Mr Baki says the action was unfortunate but police had appealed to the illegal squatters to move from the zone, but they refused.
He says sometimes the use of force is the only way to effect positive change.
The Government sent in additional police following calls for assistance from local politicians, community leaders and the Porgera Development Authority.
He says drug and alcohol abuse, coupled with an influx of firearms, had led to a rapid deterioration in law and order and an increase in crimes of violence.