Californians who were hurt by the housing crisis could soon receive a measure of good news that would save them thousands of dollars in taxes.

The Legislature passed a bill Thursday helping homeowners who received mortgage modifications, lost their homes to foreclosure or sold their houses for less than they owed on their mortgages.

The bill would prevent the canceled debt from being treated as taxable income. It conforms California law to a federal tax change that runs through 2012.

The Assembly and Senate passed the bill after removing a provision about tax fraud penalties that drew objections from Gov. Arnold Schwarzenegger. Some Republicans still opposed the bill because it introduces other taxes.

The bill now goes to the governor's desk.