U.S. President Barack Obama supports the construction of a mosque being built two blocks from where nearly 3,000 people died in the World Trade Center towers on Sept. 11, 2001. (Mark Lennihan/Associated Press)

U.S. President Barack Obama on Friday endorsed building a mosque near Ground Zero, saying the country's founding principles demanded no less.

"As a citizen, and as president, I believe that Muslims have the same right to practise their religion as anyone else in this country," Obama said, weighing in for the first time on the controversy.

"That includes the right to build a place of worship and a community centre on private property in lower Manhattan, in accordance with local laws and ordinances," he said. "This is America, and our commitment to religious freedom must be unshakable."

Obama made the comments at an annual dinner in the White House state dining room celebrating the Islamic holy month of Ramadan.

The White House had not previously taken a stand on the mosque, which would be part of a $100-million Islamic centre to be built in lower Manhattan, two blocks from where nearly 3,000 people perished when hijacked jets slammed into the World Trade Center towers on Sept. 11, 2001.

Press secretary Robert Gibbs had insisted it was a local matter.

The issue sparked debate around the country as top Republicans including Sarah Palin and Newt Gingrich announced their opposition.

While insisting that the place where the twin towers once stood was indeed "hallowed ground," Obama said that the proper way to honour it was to apply American values and show "a way of life that stands in stark contrast to the nihilism of those who attacked us on that September morning, and who continue to plot against us today."