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The U.S. Congress is moving to reverse the closings or planned closings of nearly 3,200 dealerships by General Motors Corp. (GMGMQ) and Chrysler Group LLC, setting up a clash with President Barack Obama's administration.

The U.S. House Appropriations Committee approved legislation this week seeking to restore so-called dealer franchise agreements that were wiped out during the recent bankruptcy reorganizations of GM and Chrysler. A full House vote could come as early as next week.

The legislation could block the auto makers from closing dealerships or effectively force them to increase severance payments to rejected dealers, significantly raising the costs of their restructurings.

The initiative has widespread support among House lawmakers, including Majority Leader Steny Hoyer, D-Md. A similar bill has been introduced in the Senate.

White House officials visited Capitol Hill this week to try to strike a compromise among lawmakers, auto makers and dealers to stop the legislation from proceeding, according to a person familiar with the meetings.

A Treasury spokeswoman Thursday didn't respond to a request for comment. The Treasury Department's auto task force, which has overseen the taxpayer-funded restructurings of GM and Chrysler, has argued that smaller retail networks are necessary for the companies to become viable.

Meetings were ongoing Thursday between auto executives and lawmakers. "The dialogue yesterday was good, so everybody's going to keep talking this week," said Katie Grant, a spokesperson for Hoyer.

She said the House majority leader is pushing for a "fair and transparent process so that it's clear to the dealers and to the nation at large as to how the auto companies reached their decisions."

Mark LaNeve, GM's vice president of North America sales, said he met with about 20 lawmakers Thursday to explain the company's decision to cut about 2,400 dealers - or about one-third of its network - by fall 2010. He said he sought to distinguish between GM's and Chrysler's handling of the closings by pointing out that GM is giving dealers months to wind down their operations, while Chrysler's dealer closings already occurred.

LaNeve warned that the legislation would threaten to derail a key piece of GM's restructuring and delay the auto maker's "old," underperforming assets from emerging from bankruptcy court.

"Everybody acknowledges, every dealer acknowledges, we have too many dealers in aggregate," LaNeve said.

GM spokesman Greg Martin said the dealer closings are needed to improve brand value and ultimately boost the auto maker's bottom line and that reversing the closings "would put our long-term viability at risk."

Chrysler said the House legislation "would jeopardize the viability of the new company." The company added in a statement that it "used sound business judgment during the bankruptcy process to determine the appropriate size for its dealer network."

Chrysler recently moved to terminate more than 780 dealerships.

GM estimates its closings will save the auto maker $2.4 billion a year in dealer subsidies, advertising support, incentive payments and other expenses.

-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; joshua.mitchell@dowjones.com