The law, known as the Religious Freedom Restoration Act, allows businesses "the free exercise of religion". It passed in the wake of several recent cases in the US where bakeries and photography businesses have faced prosecution or civil lawsuits after refusing to take part in same-sex weddings, angering religious conservatives.
Critics have said that the Indiana law would go further and could in theory allow a restaurant owner to refuse to seat a gay couple if they were opposed to homosexuality. Pence signed the original bill at a small ceremony joined by several conservative activists accused of making derogatory comments about gay people. One of the activists invited by Pence said homosexuality was "treatable" and supports so-called "therapy" sessions intended to change sexual orientation.
While same-sex marriage is becoming increasingly accepted in the US - it is now legal in 37 of the country's 50 states - it remains a controversial issue among the conservative voters who will help decide which Republican leads the party into the 2016 presidential election.
Bush, who is opposed to same-sex marriage, said he thought Pence had "done the right thing" by signing the bill into law. "I think once the facts are established, people aren't going to see this as discriminatory at all," he added. Other Republican contenders, including Ted Cruz and Marco Rubio, echoed his sentiment in comments made before Pence announced he was altering the law.
- Telegraph Group Ltd