* Compromise reached on scaled-back spending, tax cuts
* Vote expected Tuesday, White House pleased
* Democrats see support from at least three Republicans
By Jeremy Pelofsky and Thomas Ferraro
WASHINGTON, Feb 6 (Reuters) - U.S. Senate Democrats agreed on Friday to cut their hopes for a larger economic stimulus package and support a $800 billion compromise that would give President Barack Obama an important but narrow victory.
Democrats said a vote on passage of the measure -- drafted by leaders of a group of moderate lawmakers from both parties -- and closely watched overseas as a sign of U.S. commitment to help revive the world economy, would be held on Tuesday.
"We are pleased the process is moving forward and we are closer to getting Americans a plan to create millions of jobs and get people back to work," said White House spokesman Robert Gibbs.
With the United States in the grip of the worst economic crisis in more than 70 years -- a report on Friday showed nearly 600,000 jobs were lost in January -- Obama has demanded that a bill be put on his desk by Feb. 16.
The president may well get the bill by then, but the legislative victory would be tempered by the fact that he will likely muster only a few Republican votes.
After five days of negotiations, Democrats agreed to cut tens of billions of dollars to their earlier $937 billion proposal to trim what critics, mostly Republicans, called billions of dollars in unwarranted spending.
Democratic Senator Ben Nelson, a leader of the group, said the stimulus compromise would help to jolt the struggling economy through middle-class tax cuts and targeted investment.
"We trimmed the fat, fried the bacon and milked the sacred cows," he said on the Senate floor.
The group announced the agreement was for $780 billion in spending and tax cuts, but aides said the total could be as much as $47 billion more because of tax incentives senators previously added to boost flagging home and auto sales.
The Senate met as official data showed U.S. job losses accelerating in January and the unemployment rate surging to a 16-year high. Despite that news, U.S. stocks rallied for a second day on Friday partly in anticipation of a possible accord on the stimulus.
If the measure passes, lawmakers would have to resolve differences between it and an $819 billion version of the legislation approved last week by the House of Representatives without a single Republican vote.
Once a final bill is crafted and passed by both chambers, the measure would be sent to Obama to sign into law.
JUST ENOUGH SUPPORT
Democrats had hoped to vote on the measure late on Friday, but Republicans blocked such action, saying they had not been given a chance to read the compromise.
Senate Majority Leader Harry Reid said debate would continue on Saturday and Monday, setting up a vote on passage around midday Tuesday.
Senate Finance Committee Chairman Max Baucus said the compromise plan would pass with the support of three or four Republicans in the 100-member chamber -- a far cry from the broad bipartisan backing Obama had originally sought.
Republican Senator John McCain, whom Obama defeated in last year's presidential campaign while promising to work with Republicans, scoffed at the measure and Obama's vow.
"You can call it a lot of things but bipartisan isn't one of them," he said.
Pennsylvania Republican Senator Arlen Specter also voiced criticism of the measure, but said, "I do believe that we have to act and I believe that under all the circumstances this is the best we can do and we ought to do it."
Massachusetts Democrat John Kerry said the compromise price tag would be made up of 42 percent tax cuts and 58 percent in new spending. "It's a good balance," he said.
While a deal on the measures marks a solid start for Obama, who took office on Jan. 20, the largely party-line support in the House and Senate was a setback in his drive to foster a new spirit of bipartisan cooperation in Washington.
Opponents complained much of the new spending amounted to little more than a liberal wish list, and more should have been devoted to tax relief and job-creating construction projects instead of new rounds of other government spending.
Some of the biggest cuts in the Senate compromise were $40 billion in aid to states, $16 billion for school construction, and $5.8 billion for public health efforts.
SPENDING LOTS, FAST
Obama had said he could accept a package in the $800 billion range and that failure to act could turn crisis into catastrophe. He rejected demands for wholesale changes by Republicans, saying it was their policies that created the crisis in the first place.
Democratic Senator Kent Conrad said that some 80 percent of the package would be disbursed over the first two years, higher than the 75 percent Obama had demanded.
Details of the administration's other major initiative to address the crisis -- how it will spend the remaining $350 billion of a bank rescue program agreed to under former President George W. Bush -- are due to be announced on Monday.
A source with knowledge of the plan told Reuters the measure would offer to insure some distressed assets held by banks, authorize the government to purchase others and spend up to $100 billion to buy and modify troubled homeowner mortgages.
Senators late on Friday agreed to an amendment directing the U.S. Treasury Department to spend at least $50 billion of the fund on home foreclosure mitigation efforts. (Additional reporting by Susan Cornwell and Steve Holland; Editing by Andrew Quinn. Peter Cooney and Jackie Frank)