With the economy continuing to decline and Congressional Democrats and the Obama administration intent on spending billions of dollars on an economic stimulus package, Senate Republicans have embraced the need to address the crippled housing market.

Senate Republican Conference Chairman Lamar Alexander (Tenn.) raised the issue with President Barack Obama during the GOP’s regular luncheon on Tuesday and again during the Senate Appropriations Committee markup of the stimulus bill.

Then on Wednesday, Alexander began circulating talking points to the Conference stressing the need to address the housing crisis, according to a copy of the memo.

Similarly, Minority Leader Mitch McConnell (R-Ky.) pitched the need to address housing issues during this week’s meeting of the Republican Steering Committee, and Budget Committee ranking member Judd Gregg (R-N.H.) took up the mantra during a committee hearing on Wednesday.

The decision to take up the issue of propping up the housing market is a stark reversal from last year, when Republicans by and large rejected Democratic demands that a series of stimulus and industry bailout bills include provisions to help struggling consumers keep their homes.

Although final details are still being worked out, the GOP’s plan will likely include a number of provisions, most notably language providing most homeowners and new homebuyers with the chance to receive a 30-year, 4 percent, fixed-interest rate mortgage that would include a one-and-a-half-year government guarantee, Republican lawmakers said.

Alexander said Wednesday that the GOP’s approach is threefold: “First, fix the problem: housing. Include tax relief that creates more jobs. And don’t spend money we don’t have on programs that don’t create jobs now,” he said.

Senate Republican Policy Committee Chairman John Ensign (Nev.), who has long been a critic of government intervention in the economy, acknowledged that Republicans are learning to change their tune.

“We’re in a different time than this summer. There are a lot of things a lot of us wouldn’t want to do” under normal economic circumstances, Ensign said, adding that although other steps will be needed, the housing crisis must come first. While “the cancer has spread … you have to fix housing now.”

Sen. John Cornyn (R-Texas) agreed. “Most people have concluded that housing is a problem” since the economic downturn began in earnest this year and that addressing it first “could well be the best way,” Cornyn said.

One GOP Senator, who asked to remain anonymous, said Republicans are uncomfortable talking about government intervention in the housing markets because they don’t want to admit the gravity of the economic downturn and the need for the government to step in more forcefully.

“I think we had to too many people who were wedded to the notion that government shouldn’t be involved in these things,” the Senator said. “But the extraordinary times that we’re in have made some people reconsider.”

Sen. John Thune (R-S.D.), vice chairman of the GOP Conference, agreed that the shift in philosophy has taken some time and has been difficult for many Republicans to embrace because of their free- market beliefs.

“I think that as this thing has played out, it’s become more and more clear to a lot of people and a lot of economists that the underpinnings of the economy and the foundation of this problem was credit-related and most of it was related to the housing bubble, so if you want to fix the problem, that’s where you start,” Thune said.

Thune also said part of the difficulty has been in finding a middle ground between the practical need for some kind of government action while maintaining a free-market approach.

“A lot of it too will come down to the mechanics of how our proposal will work. Most of the proposals that the Democrats have put on the floor in terms of housing bills have been very heavy on government intervention, and I think most Republicans want to see a private-sector delivery system for this but government support in some way,” he said.

In fact, several Senators said they were not yet fully in support of the leadership’s proposal.

“I’m very intrigued by it. … I’m not persuaded that somewhere there’s not a cost to this,” Sen. Jeff Sessions (R-Ala.) said. But he noted that he likes the general outlines, saying, “It looks like a simple program. It would be a temporary program that could provide direct stimulus, and it would focus on the housing, which is clearly something that we have to do. So it has a lot of key things that I think should be in a stimulus package.”

Senate Minority Whip Jon Kyl (R-Ariz.) also appeared reluctant to embrace the talking points in full. He said Republicans were focused on three things: “The housing issue is one, wasteful expenditures is another and the lack of actual stimulative provisions” in the Democrats’ bills is the third.

The details of the Senate Republican proposal are still being crafted, Senators said, but the goal is to have a largely consumer-driven program that would allow homeowners to refinance their mortgages at a fixed, 4 percent interest rate with some sort of government backing.

Senate Republicans’ about-face on the housing issue comes as party leaders struggle to break their party from the often-rigid adherence to traditional conservative policies and chart a new course to electoral success.

McConnell will give a speech Friday criticizing the fact that Republicans have backed themselves into a geographical corner, with much of their representation in Congress coming from the South and a shrinking portion of the West.

Alexander, McConnell and others have privately and publicly begun urging their party to find what they term “new solutions” to economic and social issues, which, while based on traditional conservative philosophies, avoid the rigidity and often polarizing political effects that their policies have had in recent years.