A stand-off over reform to the US federal flood insurance program is looming after a Senate version of the bill removed wind damage as a covered risk.

Last week the Senate Banking Committee voted unanimously in favour of reforming the National Flood Insurance Program (NFIP). The omission of wind cover puts the Senate at loggerheads with the House of Representatives, which has passed its own version of the bill including wind cover.

The bill's final form must now be debated in a joint House-Senate conference.

In the Senate's version, $US20 billion ($22.36 billion) of the program's debt - mostly incurred from Hurricane Katrina - will be forgiven and a flood insurance ombudsman established to handle consumer complaints.

Insurance groups have welcomed the Senate's move to cut wind cover from the reform bill. American Insurance Association President Marc Racicot says the inclusion of wind cover would have been a dramatic expansion of the bill with the potential for huge deficits.

The National Flood Insurance Program subsidises insurers for offering cover in flood-prone regions and involves more than 5.4 million policies valued at an estimated $US800 million ($891 million).

President George W Bush has warned he will veto the legislation if the bill is presented to him including wind cover.