HONOLULU -- Overstock.com on Thursday announced it will reinstate Hawaii vendors to its Web site after Gov. Linda Lingle vetoed a bill that would have required the collection of state tax online.

Overstock.com and Amazon.com cut ties with vendors in Hawaii and other states to avoid collecting sales taxes in those states.

"Today we cheerfully comply with Governor Lingle's request that we promptly restore our relationships with her state. We are more than happy to do so and thank the Governor for seeing clearly on this bill," Overstock.com CEO Patrick Byrne said. The Legislature this year passed a law requiring companies to collect sales tax if they have marketing affiliates in the state.

Lingle said the measure put Hawaii firms at a competitive disadvantage and also because she claimed the bill is "legally defective."

Amazon.com has not announced if it will restore ties with its Hawaii affiliates.