Democrats are split over how to respond to the housing debacle, with House leaders focusing on helping homeowners facing foreclosure while the Senate moves to take care of businesses impacted by the subprime crisis.

The Senate could pass its bipartisan, business-friendly measure, which showers some $25 billion in tax breaks on home builders and banks, as early as Wednesday. That's also when a key House panel is to consider a rival Democratic plan that instead steers tax breaks toward first-time home buyers and investors in low-income rental housing.

The emerging rift clouds the prospects for a broader housing rescue plan that would have the government step in and insure $300 billion in restructured loans for homeowners staring at foreclosure. Rep. Barney Frank, D-Mass., the Banking Committee chairman, begins hearings on that measure Wednesday.

The housing debate is unfolding as Democratic leaders are considering using an upcoming war spending bill as a vehicle for additional economic aid, such as an extension of jobless benefits and food aid for the poor.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev. are calling for the rescue package President Bush signed in February, including rebates ranging from $300 to $1,200 for most wage earners, to be followed up with another so-called "stimulus" plan.

"We believe that Congress and your administration must now turn their attention to Main Street and help families in crisis," Reid and Pelosi said in a letter to Bush Tuesday. Such an effort, they wrote, would include "a financially prudent package of housing policy reforms that can avert a wider foreclosure crisis," expanding jobless benefits, government aid for struggling families, and spending on infrastructure and alternative energy.

On housing, Pelosi has made little secret of her distaste for the Senate's approach. "Hopefully, the balance will swing to being more in favor of the families who are in danger of losing their homes," she told reporters last week.

The House plan would give first-time home buyers a 10 percent credit - up to $7,500 - on the purchase of a new home. It is targeted toward lower earners, with those making $70,000 (or $110,000 for a couple) receiving smaller credits.

"We need to provide relief to the buyers and families themselves, not just the banks and builders," Rep. Charles B. Rangel, D-N.Y., the Ways and Means Committee chairman, said Tuesday. "The House bill puts families first - offering a refundable tax credit to first-time home buyers, essentially a zero-interest loan to help defray the cost of purchasing a house."

Rangel's panel is scheduled to consider the measure Wednesday, and House leaders plan to add it to the broader housing overhaul expected to come to a vote in May.

The Senate measure - which easily cleared a procedural hurdle Tuesday afternoon by a 92-6 vote - instead proposes awarding a $7,000 tax credit to people who buy foreclosed homes or homes on which foreclosure has been filed. It is aimed at helping get foreclosed homes off the market, thereby stabilizing home prices and keeping blighted houses from dragging down neighborhoods. However, some economists argue it could encourage foreclosures and distort the housing market, lowering the value of homes occupied by people who are up to date with their mortgages.

The White House, meanwhile, weighed in against the Senate bill Tuesday, opposing provisions to fund state and local government purchases of foreclosed homes and a $7,000 tax credit for people who buy foreclosed homes.

"The bill will likely do more harm than good by bailing out lenders and speculators and passing on costs to other Americans who play by the rules and honor their mortgage-debt obligations," said White House Press Secretary Dana Perino.

Jim Manley, Reid's spokesman, said those comments "sound like yet another excuse to do nothing to help the thousands of American families facing foreclosure each day. The White House has made it clear it is content to help Wall Street while Main Street fends for itself, and wrongly thinks this problem will fix itself in time."

Both plans allow people who don't itemize their deductions to claim them on their property taxes, chiefly benefiting homeowners who have paid off their homes and can't claim a deduction on mortgage interest. Both also would enhance the ability of state and local housing finance agencies to use tax-exempt bonds to refinance distressed subprime mortgages.

The Senate measure also provides $100 million in pre-foreclosure counseling, $4 billion in grants for communities with the highest foreclosure rates to buy and rehabilitate foreclosed properties, and stronger loan disclosure requirements.

Senate Democrats defend their measure as a well-rounded response to the housing crisis that's at the crux of recent economic woes. But senior House Democrats have quietly derided the plan as ineffectual and skewed toward businesses, while liberal groups have been vocal in their opposition.

"It turned out that the bulk of the bill was taken up by a homebuilder bailout," said Jacob Hay, a spokesman for the Laborers International Union of North America, the construction workers union.

Even some Republicans said the plan was titled unfairly toward the wealthy.

The bill "is very, very heavily tilted to Wall Street and not to Main Street. ... It's the little guy who's not being taken care of," said Sen. Arlen Specter, R-Pa. "This is not half a loaf, this is a crumb."

The main difference between the House and Senate bills is a provision in the latter that would permit homebuilders and other businesses absorbing heavy losses now to reclaim taxes paid when times were good. It would cost $25 billion through 2010.

The roughly $11 billion House measure would be paid for in part through a Bush administration-proposed plan to help the IRS check whether investors are accurately reporting their taxable gains. Brokers would be required to report the purchase price as well as the sale price of publicly traded stocks and mutual funds.