Create your own plugin and in the start.php file use the following hook.

elgg_register_plugin_hook_handler('action', 'login', function ($hook, $entity_type, $returnvalue, $params){
  $username = get_input('username');
  // your php code here
  // if all is ok return true
  // if all is not ok return false
});

Register your own pam_handler http://learn.elgg.org/en/stable/guides/authentication.html#pluggable-authentication-modules