India's Supreme Court has ordered a lower court in northern India to delay a potentially explosive verdict on whether Hindus or Muslims own land around a demolished mosque in northern India.

The case over the 16th century Babri mosque in Uttar Pradesh state is one of the biggest security challenges in India this year, along with a Maoist insurgency and a Kashmiri separatist rebellion, Prime Minister Manmohan Singh has said.

The Supreme Court's decision on Thursday came after an appeal to the stay on the judgment, saying the matter could be settled out of court.

The Supreme Court will meet on September 28 to decide on the appeal and commentators said the date of the actual verdict by a high court in Uttar Pradesh - originally due on Friday - was now unclear.

'The petitioner obviously believes that if the Supreme Court lends a helping hand, a soothing touch, it is possible that the warring parties will see reason and try and bring a solution,' Supreme Court lawyer Mukul Rohtagi told reporters.

The federal government has been on alert for any fallout from the verdict, appealing for calm. It banned public meetings in the state and bulk mobile text messages that could be used to spread rumors and plan riots.

Hindu mobs demolished the mosque in the town of Ayodhya in 1992, claiming it was built on the birthplace of their god-king Rama. The demolition triggered the worst religious riots since partition in 1947, and some 2,000 people died.

The verdict could prove a major political quandary for the government led by the Congress Party, a left-of-center party with secular roots.

A verdict in favor of the Hindus would force the government to uphold the verdict, making it unpopular with Muslims, a key vote bloc.

A ruling for the Muslims would mean the government would have to push Hindu groups out of the site, a political minefield.-Reuters