The measure gained important ground among Republicans in Congress, where at least a dozen to 15 Republican votes in the Senate will be needed to prevent opponents from blocking it there.

The crucial vote on that could occur as early as next Wednesday.

Two Republican senators, both of whom belong to states with major auto plants, now support the idea.

Mr Alan Reuther, the United Auto Workers union's legislative director, said one option under consideration was a smaller, more targeted amount of funding 'that would get the companies through to March'. He said the union was 'open to discussing various options like that. There's a need for immediate action.'

Democratic Senator Debbie Stabenow, who represents Michigan, the heart of the US automotive industry, said negotiations were under way over how much the package should be trimmed. 'We're still at this point talking to colleagues to see what the support is there for,' she said.

'This is about getting enough votes to be able to solve the problem.'

General Motors, Ford, and Chrysler have been clamouring for such aid for their battered industry.

The White House's rejection of using any of the US$700 billion designated for the financial meltdown sets up what could be the last showdown between President George W. Bush and the Democratic Congress.

White House press secretary Dana Perino said it would 'only lead to partisan gridlock'. She said the administration would rather Congress speed the release of a separate US$25 billion loan package for the carmakers, which was approved in September to help them meet tougher fuel-efficiency rules.

Environmentalists and House Speaker Nancy Pelosi, the senior Democrat, have vehemently opposed using that money for anything other than designing and building vehicles that get higher gas mileage and produce less pollution.

Defying Mr Bush, top Democrat Harry Reid said he would hold a vote next week on the measure, attaching the auto help to a US$6 billion bill to extend jobless aid to unemployed workers whose benefits are expiring.

Behind the scenes, proponents scrounged for more support among Republicans from states with heavy concentrations of auto manufacturers and suppliers.

A handful of other Republican senators have said they are open to the bill.

One of them is Senator Arlen Specter, who said he was 'prepared to consider it' but wanted answers on 'whether the situation is so precarious that it would take more than what is proposed'.

Democrats, too, are demanding strict limits on any auto rescue.

President-elect Barack Obama wants new government oversight of the Big Three included in the package, possibly with creation of an 'auto czar', according to an aide, who spoke on condition of anonymity.

Democratic Senator Tim Johnson, an opponent of the financial industry bailout, said he wanted to ensure it would not put taxpayers at risk.

Senate Republican Leader Mitch McConnell has not taken a public position on the plan, but he backs the White House alternative of using the separate US$25 billion in already approved fuel-efficiency loans to deal with the automakers' current woes.

Democrats are reluctant to do so, because it would mean removing restrictions on the money backed by environmental and consumer groups. Environmental groups, a key Democratic constituency, insist that any aid for the auto industry be tied to compliance with stricter clean-air rules and better fuel economy for their products.

Removing those limits from the US$25 billion loan package approved in September 'would be a huge bait and switch', said Ms Ann Mesnikoff, director of the clean cars campaign at the environmentalist Sierra Club.

The Democrats' carmaker aid plan would provide for the government to hold some kind of ownership stake in the companies for the duration of the loan to ensure that taxpayers shared in any gain and would ultimately be reimbursed.

Democrats would have no problem passing the bill in the House, where they have a much larger majority than the narrow 50-49 one they will have in the Senate once Mr Obama resigns on Sunday. Mrs Pelosi has been reluctant to convene a formal session until she is sure the measure will pass the Senate.

Lawmakers in both houses will be in Washington next week to reorganise their leadership teams and committee assignments for the 111th Congress that will convene on Jan 3.

Also slated for next week are hearings on the auto bailout that could help determine its fate. The Senate Banking Committee plans a session on Tuesday and the House Financial Services panel will hear Wednesday from the Big Three auto executives and the United Auto Workers. -- AP