The White House urged Democratic lawmakers Tuesday to avoid including any major new housing provisions in the economic stimulus plan until President Barack Obama and Treasury Secretary Timothy Geithner unveiled a "comprehensive" housing rescue plan in the coming days.

In a letter sent to Senate Majority Leader Harry Reid, D-Nev., by Obama's budget director, Peter Orszag, the White House makes it clear that its preference would be for the Senate to hold off including any major housing based initiatives in the stimulus plan.

"Any major new housing measures should be considered only after the release of the Administration's comprehensive proposal," Orszag wrote in the letter.

The White House is effectively using the letter to voice its objection to a Senate Republican plan to create a federally subsidized discounted mortgage rate in a bid to kick-start the U.S. housing market.

The proposal is expected to form the main thrust of the GOP attempt to reform the stimulus bill as it is debated on the Senate floor.

It would direct Fannie Mae (FNM) and Freddie Mac (FRE) to purchase the cheaper loans that would have rates between 4% and 4.5%. The 30-year loans would be available through 2010, and could cost taxpayers up to $300 billion.

Earlier Tuesday, Reid said that Democrats would consider the Republican proposal, although a senior aide said there were concerns over its price tag.

The letter from Orszag said that the Obama administration believed the recovery package would have an immediate boost on the housing and construction industries. It welcomed existing proposals included in the plan aimed at boosting the housing market, but cautioned against any further ones.

The primary measure included in the plan currently would waive the obligation to pay back a $7,500 tax credit available to first-time buyers on properties purchased between Jan. 1 and the end of August.

There are at least two amendments seeking to make this credit more generous.

-By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com

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