Senate Majority Leader Bill Frist said that he hopes to complete work on the bill by the end of this week, and House and Senate negotiators would then meet to iron out the differences between the legislation from each chamber.
Immigration is the hottest topic currently in Washington, and the issue could prove a major headache for President George W Bush's Republican Party. Monday saw a renewal of debate in Congress and wrangling in the Senate over legislation.
Conservative Republicans, who have shaped the debate in the House of Representatives, want a restrictive immigration policy that includes penalties for illegal immigrants and those helping them.
Bush, however, supports a guest worker programme, and his views on immigration are much more moderate than those members of Congress from the right wing of his party.
With congressional elections in November, immigration is increasingly being seen as one a key issue, and divisions within the party could hurt Republicans, who currently control both the upper and lower chambers in Congress.
The Senate is poised to pass legislation that would allow the estimated 11 million illegal immigrants to remain in the country and become eligible for permanent residence if they pay a fine and back taxes, pass a criminal background check and learn English.
The bill would also set up a guest worker programme, while more than doubling the number of border patrol agents to about 25,000 by 2011 and creating what some have described as a 'virtual wall' between the US and Mexico.
Opponents of the plan decried the proposal as granting illegal immigrants amnesty.
The House of Representatives has already passed its version of immigration reform, which is much tougher on illegal immigrants.
It would make illegal immigration a felony and punish employers who hire illegal immigrants. The bill also provides for the building of fences along the border that would stretch for 1,100 kilometres of the more than 3,000-kilometre US-Mexico frontier. The House version does not include the guest worker programme that Bush has demanded.
If a compromise is reached, each chamber of Congress must pass the revised legislation before it gets to Bush's desk for signature.
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