The ruling by Judge Derrick Watson means Trump will be prevented from enforcing his revised ban, which applies to the largely Muslim nations of Iran, Libya, Somalia, Sudan and Yemen, while it is contested in court.
The Hawaii lawsuit said the ban would harm tourism and the ability to recruit foreign students and workers, the BBC reported.
President Trump has insisted that his revised ban, which prevents travellers from the named countries entering the US for 90 days, is designed to stop terrorists travelling to America.
The Hawaii ruling came late last night after arguments from both the state of Hawaii and the US Department of Justice. The judge has now turned his temporary restraining order into a preliminary injunction, which will have a more last effect.
Courts in other states across the US have also issued different rulings to the latest ban, with a judge in Maryland halting a part of the order earlier in March.
Trump’s initial ban, which was issued at the end of January sparked protests across the world and was blocked by a judge in Seattle.
The president has complained of “unprecedented judicial overreach”, and has pledged to take the case “as far as it needs to go”.
Hawaii extends suspension of Trump travel ban indefinitely
Register for free to continue reading
Get unlimited access to the latest travel industry news and analysis, comment on articles and sign up to newsletters.
Register for free
Already registered? Login here or below.
Having difficulty logging in? Try these tips, or contact support@flymy.co.uk