May 25 (Bloomberg) -- The Senate approved the most sweeping overhaul of immigration policy in 20 years, voting to create a new guest-worker program and give those illegally in the U.S. a chance to gain legal status.

``This legislation addresses comprehensively one of the most important and complex issues facing our country,'' Arizona Republican John McCain said.

The Senate's 62-36 vote sets up a clash with the House, which in December approved legislation that emphasized strengthening barriers at the U.S.-Mexico border and didn't account for guest workers or undocumented immigrants.

The congressional debate on immigration has sparked demonstrations across the nation by people demanding immigrant rights, while creating an election-year breach between Republicans who want to focus on border control and those who back new immigration programs.

President George W. Bush, seeking to bridge that divide, has pledged to deploy National Guard troops on the border to boost security, while backing the creation of both a new guest-worker program and a path for undocumented immigrants to gain citizenship.

More than 1.1 million people were caught trying to illegally cross the U.S.-Mexico border in 2004 and an estimated 11 million undocumented immigrants now live in the U.S.

Guest Workers

The Senate measure would allow as many as 200,000 low- skilled workers a year to come to the U.S. and do jobs for which companies can't find American workers. It also provides a path to citizenship for many of the undocumented immigrants if they pay a $3,250 fine and back taxes, learn English, and pass a background check.

The treatment of those in the country illegally was one of the most contentious points of debate among senators and will be an obstacle in negotiations with the House, lawmakers said.

``It is an amnesty bill, or a legalization bill, that I think is just fundamentally unfair,'' Pennsylvania Republican Rick Santorum told reporters. ``There are very serious problems with this legislation that I hope the House of Representatives will address.''

A bipartisan compromise reached among senators last month divides undocumented immigrants into three categories.

Those in the country more than five years would be allowed to stay at their current jobs, while those here between two and five years would have to go to a U.S. port of entry to apply for legal status. Undocumented immigrants who arrived here after January 2004 would be required to leave the U.S.

During two weeks of debate, supporters of the legislation defeated amendments to eliminate the legalization process or strip out the guest-worker program. The Senate adopted an amendment to reduce the number of guest-worker visas from 325,000 to 200,000.

Fencing

Senators also approved amendments calling for the construction of 350 miles of fencing along the U.S.-Mexico border and barring as many as 500,000 immigrants who have committed a felony or a series of lesser crimes from gaining legal status.

Like the House measure the Senate's legislation would require employers to certify workers are eligible to work in the U.S.

The House measure called for 700 miles of fencing, and it endorsed making it a felony to be in the U.S. illegally and increasing penalties on anyone who aids illegal immigrants, a provision the Senate didn't include.

Congress last made major changes to immigration policy in 1986 when lawmakers granted legal status to 2.7 million undocumented immigrants and made it a crime to knowingly hire those in the U.S. illegally.

Opponents of this year's legislation said it makes many of the same mistakes as earlier measures and fails to include enough enforcement of immigration laws.

`Learned Lessons'

``We haven't learned any lessons,'' said Texas Republican John Cornyn, an opponent of the measure.

``The 1986 failure is entirely different from what we have now,'' said Massachusetts Democrat Ted Kennedy, a supporter of both measures.'' ``What we did in 1986 is not 2006.''

Many House Republicans oppose the Senate plan to let some undocumented immigrants gain legal status without leaving the country, calling it an ``amnesty'' for people who have broken the law.

House Majority Leader John Boehner has called the plan ``a big mistake.''

White House Deputy Chief of Staff Karl Rove met privately with House Republicans twice in the past two weeks to seek a compromise between the Senate and the House.

Members of the chambers will meet in the coming months to reconcile differences between the two measures and craft a final version that can be approved a final time and sent to Bush for his signature.

Border Patrol

The Senate measure calls for the hiring of up to 14,000 more Border Patrol agents and the creation of 10,000 new detention beds to house those caught attempting illegal border crossings.

Fines for employers who hire illegal immigrants are increased and the measure expands an electronic verification program to all employers to check the legal work status of all new hires.

The number of visas available each year to skilled workers would be increased from 65,000 to 115,000.

Microsoft Corp. Chairman Bill Gates said the legislation's provisions on skilled workers would help keep the U.S. the global leader in technology innovation.

``I applaud the Senate for recognizing that U.S. competitiveness depends on our ability to recruit and retain the world's best minds, no matter where they are from,'' Gates said in a statement.

The Congressional Budget Office estimated that administration of the Senate's immigration policies would cost $54 billion over the next 10 years, offset by $66 billion in new revenue the immigrants would contribute in taxes.

To contact the reporter on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net

Last Updated: May 25, 2006 20:25 EDT