* Boehner warns Republicans: pass bill or take Senate version
* House Speaker seeks to bring unruly caucus to heel on bill
By David Lawder
WASHINGTON, March 7 (Reuters) - House of Representatives Speaker John Boehner implored fellow Republicans on Wednesday to pass a $260 billion transportation bill, their party's flagship job creation measure, which has fallen victim to internal squabbling.
The legislation to rebuild roads, bridges and rail transit over the next five years was meant to help the Republican-controlled House stake an election-year claim to being the party of job creation, funding as many as 7.8 million new jobs in the U.S. construction industry.
Instead, Boehner was forced to issue an ultimatum on Wednesday to end bickering that has stalled the bill as a crucial road funding deadline draws near.
In a closed-door meeting with House Republicans, he warned that if they fail to pass the House bill, they would have to settle for a less-ambitious measure being considered by the Democratic-controlled Senate, according to a source who attended the meeting.
The Senate bill, which has broad bipartisan support, does not contain the funding and energy expansion provisions that Republicans favor.
If the House were forced to take up the Senate version, Boehner would be put in a potentially embarrassing situation, as he has repeatedly castigated the Senate for failing to consider jobs bills passed by the lower chamber.
It would also complicate efforts by House Republican leaders to counter President Barack Obama's election-year attacks that paint Republicans as obstructionists who have thwarted his efforts to tackle high unemployment and grow the economy.
Polls show voters blame Republicans more than Democrats for the political gridlock that has all but paralyzed decision-making in Congress and raised doubts among investors that Washington has the political will to deal with pressing issues, such as deficit reduction.
BOEHNER URGES ACTION
A temporary law financing road, rail and bridge repairs expires on March 31. Without new legislation, as many as 1.8 million construction workers could be laid off, Senate Democrats warn.
The House measure hit roadblocks from the start, alienating Democrats and the White House by trying to fast-track the delayed TransCanada Corp's Keystone XL oil pipeline from Canada to Texas. It also lost support from both parties by proposing to eliminate dedicated funding for mass transit.
Fiscally conservative Republicans balked at the bill's price tag, but a cheaper, 18-month measure floated by Republican leaders also failed to gain support.
"Right now that bill lacks the votes to pass. And every other option we've tried has even less support," Boehner was quoted as saying to House Republicans by the source who attended Wednesday's meeting.
The top Republican told members inaction means "punting on the opportunity to pass an infrastructure bill that bears our stamp," the source said.
"It means giving up on the opportunity to make sure a bill is enacted that is responsibly paid for; that has full-scale reforms in it; and most importantly, that is linked to increased production of American energy. But right now it's the plan."
The dilemma is a familiar one for Boehner, who has struggled over the past year to get the support of first-term Republicans backed by the fiscally conservative Tea Party movement.
Meanwhile, Senate negotiators are working on a deal to consider which amendments will get votes on their smaller, $109 billion transportation bill. These are likely to include votes on Keystone and relaxation of clean air standards for industrial boilers, Democratic Senator Barbara Boxer said.