New Delhi (CNN)India's Supreme Court on Saturday granted Hindus permission to build a temple at the centuries-old Ayodhya holy site, ending one of the country's most politically charged land disputes.

The 2.77 acres, previously claimed by both Hindus and Muslims, was the site of a 16th-century mosque demolished by right-wing mobs in 1992 in Ayodhya, a town in the state of Uttar Pradesh. But in a unanimous decision, India's top court ruled Saturday that a Hindu temple to the god Ram could be constructed at the site, while giving Muslim representatives a separate 5 acres of land in the town.

To settle the ownership claim, the Supreme Court was asked to consider ancient texts, a 500-year-old diary written by a Mughal emperor, travelogues from medieval merchants, as well as colonial-era surveys and archeological records.

The destruction of the Babri Masjid mosque by Hindu extremists in 1992 sparked some of the worst violence seen in India since independence, with more than 2,000 people killed in nationwide rioting. Dozens of temples and mosques were also targeted in a series of revenge attacks by Hindu and Muslim mobs.

Since then there have been calls to build a Hindu temple on the contested site, a demand that has long animated Hindu hardliners -- and worried Indian liberals, who fear outbursts of sectarian violence. Such fears have been fanned by a spate of high-profile lynchings of minorities in recent years.

In an address to the nation on Saturday, India's Prime Minister Narendra Modi said the court's decision "has brought a new dawn" for the nation. "The dispute may have affected generations," Modi said. "But after this verdict, we need to resolve that a new generation, with a new start will join in the creation of a new India. Let us begin afresh and establish a new India." Modi added that the country should now work towards its future. "There are many challenges in front of India, many aims and many goals," he said. "Indians together can achieve these aims together and reach new goals together."