Indiana Gov. Mitch Daniels defended divisive right-to-work legislation that he only recently put his name behind, while asking House Democrats to end their boycott of the measure.

Daniels spent a large amount of his final "State of the State" speech Tuesday night touting the national reputation Indiana has developed over his seven years in office, as well as a modest 2012 legislative agenda ranging from more money victims of the Indiana State Fair stage collapse to a statewide smoking ban.

But he dedicated roughly four minutes of his half-hour speech to explaining his evolution in support of right-to-work this year. Daniels made no mention of the issue in his annual speech last year, and urged lawmakers to hold off lest it derail other legislation like an overhaul of the state's education system.

Indiana could become the first state in more than a decade to approve a ban on private contracts that require workers to pay union fees. Indiana House and Senate Republican leaders have made it their top legislative priority this year, and Daniels has campaigned vigorously for it since announcing last month that he would support it the measure.

Republican lawmakers and guests who filled the House chamber applauded heartily throughout the speech, but House and Senate Democrats largely held their applause.

More than a dozen House Democrats skipped Daniels' speech in a rare move. Democratic House Minority Leader Patrick Bauer said afterward he left it to each lawmaker in his 40-member caucus to decide whether they would attend the speech.

Hundreds of union protesters packed the halls outside the House chamber, booing as Daniels walked in for his speech and chanting "Shame on you!" as he left. The protesters' boos and chants could be heard through the glass panes of the House chamber as he spoke about right-to-work.

Although lawmakers are only five days into the 10-week legislative session, the right-to-work battle in the House has stalled most work. House Democrats ended a three-day boycott over the measure Monday only to stall business again Tuesday following a party-line vote in favor of the labor bill earlier in the day.

In his final annual address to the Legislature, Daniels argued that other states win out in competition for new business because of their right-to-work laws.

"Too often we never get a chance, because a right-to-work law is a requirement. Especially in this poor national economy, a state needs every edge it can get," he said.

But he also took care not to downplay Indiana in a speech that was otherwise laden with plaudits about his work over the last seven years in office. Daniels is term-limited against running for re-election in November.

Toward the end of his right-to-work pitch, Daniels relayed an allegory about two politicians written in 1861. One Democrat and one Republican go to Kentucky to settle a political dispute in a knife fight. At the close of the story, Daniels takes two subtle shots at House Democrats — telling them they should stay in the state as well as in the House chamber.

Indiana House Democrats left the state for five weeks last year to block the right-to-work measure. This year, though they have stalled the still-young 2012 session, they have remained in Indianapolis.

"And we think we have disagreements!" Daniels says. "When we do, I hope we'll keep them not only in state, but also in this chamber, where the people's business is supposed to be settled."

When there are the numbers needed to conduct business, Republican House Speaker Brian Bosma has acted quickly to advance the right-to-work measure. Tuesday's speedy approval of the measure in committee, though, appeared to backfire with another Democratic boycott.

The Legislature's Democratic leaders said Daniels should have used the speech to bring the two parties closer together rather than drive a wedge further between them over the right-to-work bill.

"I was mostly disappointed he missed an opportunity he could have used tonight to bring Democrats and Republicans together he could have used the to bring House and Senate together to talk about how we are really going to serve the needs of Indiana," Democratic Senate Minority Leader Vi Simpson said after the speech.