* Senate halts debate, will resume work Friday
* Obama says package needs to be in $800 billion range
* Obama warns economic crisis could be irreversible
* Grim jobs data underscores sense of crisis
By Thomas Ferraro and Jeremy Pelofsky
WASHINGTON, Feb 5 (Reuters) - U.S. Senate Majority Leader Harry Reid abruptly halted debate on a $937 billion rescue bill late on Thursday, but said lawmakers would resume work Friday and remained upbeat they would pass the measure demanded by President Barack Obama to combat a deepening recession.
"I would hope that we could complete this legislation tomorrow (and) I'm cautiously optimistic," Reid told colleagues after a third day of considering amendments to the measure.
Obama urged members of the Senate as well as the House of Representatives to resolve their differences and get a final bill to him within the next week or so.
"If we do not move swiftly to sign the American Recovery and Reinvestment Act into law, an economy that is already in crisis will be faced with catastrophe," Obama said during a meeting with House Democrats in Williamsburg, Virginia.
Reid said if there is no Senate progress on Friday he will file a motion to set up a showdown procedural vote for Sunday.
About a third of the Senate package is composed of tax relief, with the rest devoted to spending on such projects as rebuilding roads and bridges and schools. Democrats fought off Republican attempts to alter the bill to add more tax cuts and slash spending.
Republicans complain some projects would do little to stimulate the economy or create jobs. Democrats say the spending Republicans call wasteful amounts to less than 1 percent of the package.
Reid said he was confident he can muster the 60 votes needed in the 100-member chamber to move to end debate and head toward a vote on passage of the bill, perhaps on Monday.
MODERATES SEEK COMPROMISE
With a group of about 18 moderate Senate Republicans and Democrats seeking an agreement of their own to trim the package by roughly $100 billion to $837 billion, Obama signaled that might be acceptable -- even though Senate Democrats warned earlier in the day it might be inadequate.
"Our original figure was roughly in the 800 range. There have been some changes to our framework ... but that's, I think, the scale that we need to deliver for the American people," Obama told reporters while en route to Williamsburg.
Earlier, Reid indicated he might be able to win passage of the package without the proposed compromise by the Senate moderates. Aides said Reid bet he could win approval with limited reductions and feared slashing the proposal by $100 billion could backfire and cost him Democratic votes.
"Our number one goal is to pass this bill," Reid told reporters. "They (the Republicans) cannot hold the president of the United States hostage."
Obama had sought bipartisan support for the stimulus plan as part of his promise to change the tone in Washington. But partisan bickering quickly resumed, and House Democrats passed their $819 billion version of the stimulus package last week with no Republican support.
Differences between the House and Senate legislation would have to be worked out.
At the Democratic retreat in Virginia, House Majority Leader Steny Hoyer said House Democratic leaders think the bill should be $890 billion to $900 billion. "We need to act. We're going to do that this coming week," he said.
SEARCHING FOR COMMON GROUND
The price tag for the Senate measure grew to $937 billion on Thursday after an estimate for a tax incentive to spur home sales added to the bill was revised upward. Other amendments were added, including limits on executive compensation at companies that get federal government aid in the future.
Senate Minority Leader Mitch McConnell has sought cuts in the package, but he and fellow Republicans do not want to be seen as obstructing efforts to stem the worst economic crisis since The Great Depression, party aides said.
"Republicans are no less interested in doing what is right for our country than Democrats are," McConnell said. But, he added, "we have very serious differences ."
Republican Senator Susan Collins of Maine and Democratic Senator Ben Nelson of Nebraska were leading the drive by moderates to find a compromise. Nelson said White House officials still hoped for a bipartisan solution, but Obama, taking a tougher tone, warned that "time for talk is over."
"The time for action is now, because we know that, if we do not act, a bad situation will become dramatically worse," Obama said in a speech early in the day at the Energy Department.
Republican Senator John McCain, who lost to Obama in the November presidential election, criticized what he called a Democratic rush to pass the bill. "They are establishing a very partisan approach to the greatest domestic challenge we face."
In his speech at the Energy Department, Obama seized on data that showed new jobless claims at a 26-year high as evidence that time was of the essence.
"These numbers that we're seeing are sending an unmistakable message, and so are the American people, that time for talk is over," he said. (Additional reporting by Susan Cornwell, Richard Cowan, Steve Holland and Jeff Mason; editing by David Storey and Todd Eastham)