WASHINGTON (Reuters) - President George W. Bush, whose administration suffered a stinging setback over a Dubai company's deal to operate some U.S. port terminals, faces another brewing Republican revolt over immigration reform.

With the full Senate due to take up the issue before the end of March, Republicans are split over what to do about the estimated 12 million illegal immigrants in the country. Whichever way they turn, some part of their governing coalition will be furious, analysts said.

The issue could also antagonize Hispanic voters -- a swing group Bush has targeted as a source of Republican growth -- before November elections in which Democrats are seeking to regain control of Congress.

"I have seen virtually no agreement on anything when it comes to this immigration bill. Emotions are running at an all-time high," said Pennsylvania Sen. Arlen Specter, chairman of the Senate Judiciary Committee. He spoke as debate began in his committee on an ambitious overhaul of U.S. immigration law.

Specter is pushing Bush's proposal to create a guest-worker program for jobs that Americans either cannot or will not do. The committee is also trying to agree on a provision for illegal aliens to gain legal status.

That has angered a sizable anti-immigration wing in the Republican Party. More than 90 House members, nearly all Republicans, have joined a caucus headed by Colorado Rep. Tom Tancredo, who has vowed to derail Bush's guest-worker plan and any legislation that smacks of what he calls "amnesty" for illegal immigrants.

"There is a loud group of anti-immigration folks out there for whom this is the main issue they care about. They make a lot of noise, send e-mails and write and call their congressional representatives," said John Gay of the National Restaurant Association, which backs a guest-worker program and a way for illegal immigrants to become legal.

"This issue splits both parties but it splits the Republicans more," he said.

In a debate roiled by charges of xenophobia and lax security, Republican lawmakers broke with Bush this month and forced a Dubai company pull back from its plans to acquire management of some terminal operations in six major U.S. ports.

On immigration, Massachusetts Democrat Sen. Edward Kennedy has pushed for a guest-worker program and a path for legalization, but many Democrats have been content to watch the Republicans fight, said Steve Camarota of the Center for Immigration Studies.

One Republican aide said the party needed a major accomplishment before the November election. But others doubt an immigration overhaul can pass this year because the issue is so divisive.

The House of Representatives, where anti-immigration sentiments are stronger than in the Senate, passed a bill last December to tighten border security and toughen enforcement against illegal immigrants.