US House passes housing bill; Bush lifts veto threat

*House passes housing bill; Senate vote still to come

*Bush drops veto threat, will sign housing bill

*Bill would offer gov't safety net for mortgage markets

By Kevin Drawbaugh and Tabassum Zakaria

WASHINGTON (Reuters) - The U.S. House of Representatives passed a massive housing rescue bill on Wednesday while the White House dropped a threat to veto it, paving the way for measures aimed at shoring up the worst U.S. housing market since the Great Depression.

Removal of the presidential veto threat spurred investors to snap up shares and bonds of mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), which would receive an emergency government lifeline under the bill.

The measure, approved on a 272-152 vote, now moves to the U.S. Senate, where a vote may take place later this week or early next week.

The bill had been in the works for months, but took on greater urgency since concerns about Fannie and Freddie's finances mounted in mid-June

Ten days ago, the U.S. Treasury pledged an unspecified credit line for the companies and said it would buy their stock, if needed, to bolster investor confidence. Those emergency measures required congressional approval.