WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson said Wednesday that housing prices need to be allowed to continue to drop while every effort is made to ensure the adjustment does not cause excessive harm to the economy.

"A correction was inevitable and the sooner we work through it, with a minimum of disorder, the sooner we will see home values stabilize, more buyers return to the housing market, and housing will again contribute to economic growth," he said on prepared remarks for delivery to the U.S. Chamber of Commerce.

The U.S. Treasury chief also said no one should conclude that broker-dealers and other big financial firms will get permanent access to new lending facilities made available by the Federal reserve to ease market stresses.

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