(Adds executives signing letter, Dreamer reaction)
By Steve Holland and Jeff Mason
WASHINGTON, Aug 31 (Reuters) - President Donald Trump is expected to rescind an Obama administration policy that protects from deportation nearly 800,000 immigrants who as children entered the country illegally, setting the stage for a fight with U.S. business leaders and lawmakers over tough immigration policy.
A senior administration official told Reuters on Thursday that the plan could be announced as early as Friday and that Trump would let the so-called Dreamers stay until their work permits expire.
Trump has promised to crack down on illegal immigration to give more jobs to Americans. But business leaders say the Dreamers make important economic contributions and that ending the program will hit economic growth and tax revenue.
The technology industry quickly mobilized opposition, as it did to Trump's travel ban in January for visitors from Muslim-majority countries. Microsoft Corp President Brad Smith said the country cannot afford to "lose the tremendous talent of these individuals."
On Capitol Hill, Democratic lawmakers and a handful of Republicans urged Trump not to scrap the Deferred Action for Childhood Arrivals (DACA), or "Dreamers" program.
"@POTUS must uphold pledge 2 treat #DREAMers with “great heart” + give these young folks certainty 2 stay in US, the only country they know," U.S. Representative Ileana Ros-Lehtinen, a Florida Republican who is Cuban-American, said on Twitter.
Trump, a Republican, had pledged on the election campaign trail to scrap all of Democratic former President Barack Obama's executive orders on immigration.
What to do about the so-called Dreamers has been actively debated within the White House and Trump administration. One senior administration official described the debate as a "tug of war" between factions in favor of the move and those opposed. Officials, believing the DACA program to be ultimately unconstitutional, want Congress to impose a legislative fix for the Dreamers, two officials said.
White House spokeswoman Sarah Sanders told reporters that Trump and his senior advisers were still reviewing the DACA program and that the president not made a final decision on how to proceed.
Asked whether Trump still stood by a comment in February about treating Dreamers "with heart," Sanders said: "Absolutely, the president stands by his statement."
The overwhelming majority of the Dreamer immigrants came from Mexico and other Latin American countries.
Over 200,000 of them live in California, while 100,000 are in Texas, which is struggling to recover from Hurricane Harvey. New York, Illinois and Florida also have large numbers of DACA recipients.
Microsoft's Smith said in a blog post on Thursday that the company knows of 27 employees who are DACA beneficiaries, including software engineers, finance professionals and sales associates.
“These employees, along with other DREAMers, should continue to have the opportunity to make meaningful contributions to our country’s strength and prosperity,” Smith wrote.
In addition, a letter being circulated among tech companies obtained by Reuters expressed concern over the threatened demise of DACA, calling Dreamers vital to the economy. Executives from Microsoft, Lyft, Uber and other prominent firms have signed onto the letter, a source familiar with the situation said.
“With them, we grow and create jobs,” the letter said. “They are part of why we will continue to have a global competitive advantage.”
U.S. Representative Mike Coffman, a Colorado Republican who is a centrist, announced on Twitter that he will attempt to force a vote on bipartisan legislation that would protect from deportation immigrants who entered the country illegally as children.
“#DACA participants grew up here, went to school here, and should be allowed to stay here. The time has come to take action,” Coffman wrote on Twitter.
Coffman introduced his bill earlier this year, along with Democratic Representative Luis Gutierrez. It is a companion bill to legislation introduced in the Senate by the chamber’s number two Democrat, Dick Durbin, and Republican Lindsey Graham.
Ten Republican state attorneys general in June urged the Trump administration to rescind the DACA program, while noting that the government did not have to revoke permits that had already been issued.
If the federal government did not withdraw DACA by Sept. 5, the attorneys general said they would file a legal challenge to the program in a Texas federal court.
The effort was led by Texas and joined by state attorneys general in Alabama, Arkansas, Idaho, Kansas, Louisiana, Nebraska, South Carolina, Tennessee and West Virginia.
Kayleigh Lovvorn, a spokeswoman for Texas attorney general, on Thursday said her office has no plans to push back the Sept. 5 date.
A larger coalition of 26 Republican attorneys general had challenged the Obama-era policy covering illegal immigrant parents, known as DAPA, that had been blocked by the courts before it took effect. The Department of Homeland Security rescinded that policy earlier this year.
Immigrants who entered the country illegally as children have been able to qualify for DACA if they were under the age of 31 when the program began on June 15, 2012. They would have to have entered the United States before they turned 16, however, and to have lived continuously in the country since June 15, 2007.
"DACA allowed me to reach my goal of a bachelor’s degree in sociology but I still have dreams of getting my master’s degree and even a doctorate," said 25-year-old Diana, who immigrated with her parents from Mexico when she was a one year old. She asked that her family name not be used.
"So I’m going to continue moving forward" she added, "and I’m going to keep fighting for my community because it doesn't end here."
Additional reporting by Dan Levine, Susan Cornwell and Omar Younis; Editing by Tom Brown and Mary Milliken