DALLAS — Blockbuster Inc., the world's biggest video chain, will let customers who rent films on the Internet return them to its stores, including those in Hawai'i, in exchange for free rentals as the company tries to compete with Netflix Inc.

The new service was available to all online rental subscribers as of yesterday, the Dallas-based company said in a statement.

Blockbuster has expanded its Internet rental program as it tries to fend off Netflix, the largest provider of movie rentals via the mail, and new film download services from Apple Computer Inc. and Amazon.com Inc. Blockbuster has closed stores and cut expenses after sales fell for five consecutive quarters.

"It's a way to say to the consumer that Blockbuster has something to offer for the same money that Netflix can't," said Stacey Widlitz, an analyst at Pali Capital Inc. in New York. "It's a way to ramp up online subscriptions without spending a lot of money and getting more people in the stores."

Blockbuster's new service will work because people can impulsively rent movies while Netflix requires planning, said Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles. Netflix customers must wait at least two days after watching a DVD to get the next film on their rental list, he said.

Blockbuster had online subscriber growth, more customers in stores and lower Web subscriber turnover in test markets for the program, Blockbuster chief executive John Antioco said.

"It gives the customer everything the other guy does but a heck of a lot more," Antioco said. "Until today customers had to choose between online and in-store. They don't have to choose anymore. They can have both."

The Total Access program will be available in more than 5,000 of Blockbuster's 8,500 locations. All current and new Web rental subscribers, including those on the $5.99 and $7.99 monthly plans, will be upgraded, Blockbuster said.

Dropping off a movie to a Blockbuster store will automatically cause the next movie in a Web subscriber's list to be shipped a day earlier than if the film was returned in the mail.

Total Access customers will receive a monthly coupon for a free in-store rental. Movies rented through the free in-store exchange or with the coupon don't count against the total number of DVDs a Web customer can have out at any one time.

Blockbuster said it had 1.5 million Web subscribers at the end of September, 50 percent more than a year earlier, including 100,000 trial subscribers who became paying members. The company added 150,000 subscribers in the third quarter.

Blockbuster's goal is to have 2 million subscribers by year-end. Netflix said last month it had 5.66 million subscribers.