WASHINGTON (Reuters) - The two top members of the Senate Banking Committee said on Thursday they were close to a deal that would likely clear the way for Senate approval of a multibillion dollar housing rescue package.

The panel's Democratic chairman, Sen. Christopher Dodd, and top Republican, Sen. Richard Shelby, postponed a public meeting on the legislation during the morning to continue negotiations that sources close to the talks cautioned could still unravel.

"We're very, very close," Dodd said in a morning appearance on CNBC. "There's really maybe one or two issues -- maybe only one that's outstanding here that we need to resolve."

Industry lobbyists said the lawmakers had agreed to language to create a new regulator for housing finance companies Fannie Mae and Freddie Mac, but had not come to terms on a funding mechanism for a proposed $300 billion mortgage-insurance fund.

The Congressional Budget Office has said that plan would cost up to $2.7 billion to expand the Federal Housing Administration so it can help arrange lower-cost refinancing for as many as 500,000 homeowners whose homes have dropped in value since they took out their mortgages.

Shelby has insisted taxpayer money not be used to finance the program. Lawmakers on Thursday were discussing a plan to have Fannie and Freddie backstop the fund, sources said.

"The divide is not very much now but it's a very important divide," Shelby said on Fox Business Network.

A committee meeting to work on the bill and possibly hold a vote was reset for 3 p.m. EDT from 10 a.m. EDT. With little more than an hour to go before that meeting, Dodd said talks were still under way.

Since last spring, the nation's mortgage market has been rattled by sinking home values that have erased billions of dollars of investor wealth. An estimated two million foreclosures are forecast for this year.

In March, the Federal Reserve put billions of dollars on the line to facilitate the takeover of Wall Street investment firm Bear Stearns Cos Inc, which was near collapse. Democrats have criticized policy-makers for being too willing to bail out investors and reluctant to aid struggling homeowners.

Last week, the House of Representatives approved its own version of legislation to set up the $300 billion fund, adding billions more in homeowner aid to stabilize the market.

The Bush administration has threatened to veto the House legislation, which it has said would use taxpayer money to bail out lenders and speculators.

Industry sources close to the Senate talks said staffers for Dodd and Shelby had worked into the early morning hours to try to reach a deal.

House Financial Services Committee Chairman Barney Frank, who sponsored the House bill, said on Thursday he saw some chance a deal could be reached.

"I wouldn't say I was optimistic, but I think it has a reasonable chance," the Massachusetts Democrat said.

(Reporting by Patrick Rucker and Kevin Drawbaugh; Editing by Dan Grebler)

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