A top Senate Democrat Thursday urged Republicans to support the more than $900 billion economic recovery plan and pledged to work with them on legislation to address the housing crisis in exchange.

Sen. Richard Durbin, D-Ill., the No. 2 ranking Democrat in the Senate, said that he was not adverse to a GOP proposal to create a federally subsidized discounted mortgage rate in a bid to drive up demand for housing and to assist current homeowners struggling to make their monthly repayments.

But citing concern over the potential cost of the plan, Durbin said he would not support the proposal at the expense of creating jobs. He said Republicans would strip out hundreds of billions of dollars in spending from the stimulus plan to pay for their housing plan.

Republicans have said they would cap the costs of the discounted loan at $300 billion, although they said they believed it would actually cost the Treasury much less.

"I hope they would stick with us on stimulus and then we would work with them to address the housing crisis," Durbin said.

The GOP plan would create a mortgage rate between 4%-4.5% and direct Fannie Mae (FNM) and Freddie Mac (FRE) to buy the new loans off the books of lenders who offered them. The federal government would subsidize the banks' closing costs to encourage lenders to participate in the scheme.

It would be available for a year to both new homebuyers and those looking to refinance. The loans would be for 30 years.

Durbin said Democrats had shown a willingness to compromise by accepting an amendment put forward by GOP Sen. Johnny Isakson, R-Ga., that would double in size and extend in duration an existing homebuyers credit.

Majority Leader Harry Reid, D-Nev., said earlier this week that Democrats would consider the Republican housing plan. But the White House urged Democrats not to include any major housing proposals in the stimulus plan before the Obama administration released its own plan to tackle the ailing housing market.

President Barack Obama and Treasury Secretary Timothy Geithner are expected to announce their plan next week.

-By Corey Boles, Dow Jones Newswires; 202-821-2412; corey.boles@dowjones.com