Stoke-on-Trent is to have a new mosque on the site of a former council depot.
The city's elected mayor Mark Meredith told BBC Staffordshire TV he was happy to be handing over land on Regent Street, Hanley, to Muslim charities.
They will lease it for just a peppercorn rent and work is set to start later this year.
The land was said to be worth £400,000 on the open market and the British National Party offered £100,000 saying it would build affordable homes there.
The current mosque is said to be too small for the community and is based in a former Methodist chapel.
The piece of land proposed for the mosque has been empty for 10 years and planning permission has been granted for the scheme.
The mayor said it was good news the area was being redeveloped, with nearby housing and office developments expected to follow.
Church leaders from several faiths had previously met at the proposed site for the mosque to offer prayers for peace and unity.
The Bishop of Stafford, the Rt Rev Dr Gordon Mursell, had said the BNP represented a "really dangerous threat to all people who care about the future of our society".