Firemen found 44-year-old Chan Sui-ying unconscious in the bedroom, her face blackened with soot.
Senior fire station officer So Chung- leung said the blaze was probably caused by an electrical short circuit in a household altar light.
Piles of rubbish in the flat hampered rescue efforts.
Sources said Chan lived with her mother who makes a living by collecting discarded cardboard boxes in the district every morning. The mother, in her early 70s, broke down in tears when police escorted her to the burned-out home.
A neighbor said though Chan has a brother, her mother looked after her. The brother seldom visited them since he moved out some time ago.
"The mother and daughter often go out together," she said, adding that Chan was "introverted and shy."
"She also had walking difficulties and needed help from her mother to get on the minibus."
Secretary for Labour and Welfare Matthew Cheung Kin-chung said the Social Welfare Department will see if the mother needs immediate financial assistance.
According to the Hong Kong Council of Social Services, there are about 4,000 mentally handicapped people on the waiting list for special-care hostels.
The government will acquire 300 more places from private hostels for mentally handicapped people in the next four years, on top of the existing 5,440 places provided by non- governmental agencies.
But Fernando Cheung Chiu-hung, a former lawmaker for the social welfare sector and now a lecturer at the Hong Kong Polytechnic University, said even the most severely affected have to wait more than 10 years for a hostel place.
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