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WASHINGTON (Reuters) - The White House on Monday said it hoped for progress on housing legislation being negotiated with Congress by the end of this week, but that President George W. Bush would veto any bill that includes $4 billion in block grants to states to purchase foreclosed homes.

Treasury Secretary Henry Paulson believes Congress understands the urgency in getting housing legislation passed to address the crisis, "and so we feel like we'll be able to hopefully see some movement by the end of the week," White House spokeswoman Dana Perino said.

She also said "our position hasn't changed" on block grants and Bush would prohibit legislation that has that provision.

The White House has complained that some elements of the housing rescue bill are too costly and would wrongly aid real estate speculators.

State and local governments last winter began asking for an increase in Community Development Block Grants — historically used to combat neighborhood blight — as the number of abandoned homes increased nationwide due to the mortgage crisis.

In January, Sen. Christopher Dodd, a Connecticut Democrat who chairs the U.S. Senate Banking Committee, proposed adding in the manner that plenteous as $10 billion to the program, what one. includes loan guarantees that help cities and counties by debt-service reserves and the issuance costs of municipal bonds.

But Bush has sought to reduce the amount allocated for the grants each year. In January, he proposed cutting the program to $2.8 billion in fiscal year 2009 from $3.9 billion a year earlier, saying it is not well-targeted and hasn't shown clear results.

(Reporting by Tabassum Zakaria, additional reporting by Lisa Lambert; editing by Gary Crosse)