(Reuters) - Indiana and Arkansas lawmakers on Thursday crafted remedies to religion acts after the measures, which had passed easily in the Republican-controlled statehouses, ran into nationwide criticism that they allowed discrimination against gays.

In Indiana, lawmakers flanked by gay-rights activists unveiled changes to protect civil liberties under the state's Religious Freedom Restoration Act (RFRA), which Republican Governor Mike Pence signed into law last week.

Thursday's news conference was a dramatic turnaround from the governor's signing act, which was attended by some religious activists who have decried homosexuality as a mortal sin.

Indiana was flooded with protests, threats of boycotts and warnings from powerful U.S. firms such as Apple Inc. about looming economic damage for the act's perceived stand against U.S. ideals of inclusion.

The controversy had been set to cast a shadow over the state's hosting of the men's NCAA college basketball championship this weekend.

"What was intended as a message of inclusion, inclusion of all religious beliefs, was interpreted as a message of exclusion, especially for the LGBT (lesbian, gay, bisexual and transgender) community," Speaker Brian Bosma told a news conference in Indianapolis.

"Nothing could have been further from the truth but it was clear that the perception had to be addressed," he said.

Critics say the measures are part of a broader effort in socially conservative states to push back against a series of U.S. court decisions allowing same-sex marriage. The U.S. Supreme Court is set to take up the issue this month.

Supporters have said the laws do not allow for discrimination and are needed to protect religious freedoms.

The rewritten Indiana proposal says it does not authorize a provider to refuse to do business with anyone on the basis of "race, color, religion, ancestry, age, national origin, disability, sex, sexual orientation, gender identity or United States military service."

However, churches and religious organizations are exempt, which could allow them to use the law as a defense if they were sued by an individual claiming discrimination.


Arkansas lawmakers are set to pass similar fixes as early as Thursday and send them to the governor for approval.

The Arkansas Senate took up the challenge late on Wednesday, sending legislation to the House of Representatives that would bring it in line with federal statutes. The measure cleared a House committee and looked set to be approved in an afternoon session.

About 200 gay-rights activists waved rainbow flags outside the Capitol, seeing a reform as imminent. But some said more needed to be done to protect the rights of the LGBT community.

"From a practical perspective, what difference does this bill fix make? There is still no protection against discrimination against LGBTs in state law," said social activist Rose Adams.

Arkansas Governor Asa Hutchinson, a Republican, on Wednesday had sent back the act, which was passed this week in the Republican-controlled statehouse. Arkansas-based Wal-Mart Stores Inc., the world's largest retailer, was among many groups to urge Hutchinson to veto the measure.

The Arkansas Family Council, which supported the earlier bill, was willing to accept the revisions.

"The original religious freedom bill was the Rolls-Royce of religious freedom laws. The replacement bill is a Cadillac," council President Jerry Cox said in a statement.

Twenty U.S. states and the federal government have RFRAs, which allow individuals to sue the government if they believe their First Amendment religious rights have been violated.

But those in Indiana and Arkansas go further than all but that of Texas, allowing lawsuits between private parties. The Texas law also includes provisions that it cannot be used to violate civil rights.

That raised the possibility of businesses such as realtors using the law as a defense if they are sued for refusing to show homes to a member of the LGBT community.