UPDATE 2-US automakers clear big hurdle for $25 bln in loans

(Recasts, adds House passage, industry comment)

By John Crawley

WASHINGTON, Sept 24 (Reuters) - The U.S. auto industry is on the verge of securing up to $25 billion in government loans to help ease financial distress and produce more cars and trucks that consumers want to buy.

The House of Representatives approved a measure -- included in a larger, must-pass spending bill -- on Wednesday that would fund the low interest financing. The Senate plans to follow through swiftly on the legislative package and President George W. Bush is expected to sign off before Oct. 1.

Enactment would represent the first government intervention in the auto industry since the 1980 bailout of Chrysler with $1.2 billion in loan guarantees.

"Congress clearly recognizes the need to move forward at this critical time to make available this source of capital," Greg Martin, a spokesman for General Motors Corp (GM.N) said.

GM shares were lower on Wednesday, while Ford stock rose more than 3 percent on the New York Stock Exchange.

While automakers pressed for financing, they and their backers in Congress continued to insist the package did not represent a bailout, even though the Detroit companies are reeling from depressed sales and a rock bottom credit outlook.

"There are those who will lump it in with the bailouts. That's garbage," said Rep. Joe Knollenberg, a Michigan Republican who played a crucial role in securing the help.